How much of an impact would that have on the fertility rate?

2022-07-19 0 By

The following article comes from bottom line thinking, written by Yang Sanyi bottom line thinking.Yang Sanyi, a tax agent and lawyer who has been engaged in international tax work for more than ten years, recently, China’s personal income tax has added a new seventh deduction after six special deductions.The deduction for care of infants and Children under the age of three (Notice of The State Council on the Establishment of Individual Income Tax Special Additional Deduction for Care of Infants and Children Under the age of three, Guo Fa (2022) No. 8), which is connected with the original six deductions for children’s education, can make a child after birth,From the infant period (3 years) to preschool education (3 years), compulsory education (9 years), high school education (3 years), until the higher education of college undergraduate course, master’s doctor all the way to read, parents every month children can deduct 1000 yuan before tax.Image: the state administration of taxation in my experience, as a father since before the age of three need formula milk powder, diapers and other baby products, their daily expenses may be higher than compulsory education child, the original claim additional deduction in the name of their children’s education, and the children are not allowed to deduct before the age of three, some are actually, this is too late now.However, there are many arguments that this is a preferential policy to raise the birth rate in Korea, so I think this kind of additional tax deduction can only be “insufficient supplement.”First of all, the method of additional tax deduction based on marital status or number of children is very common in the world, which is a kind of “single tax” in practical sense.However, the effect of this tax deduction is a drop in the ocean compared to the huge decline in the quality of life that marriage or childbirth may bring. Japan and South Korea in East Asia have adopted various forms of “single tax”, either explicitly or implicitly, just like China in recent years, but the fertility rate shows no signs of turning back.In general, the effect of tax means in this respect is not ideal, and the form chosen by China may be more difficult to play a role, because China’s personal income tax is not universally levied, the proportion of taxpayers is too low.This involves one of the most “mysterious” figures in China’s tax authorities – the number of individual income tax payers.Such macro data should not involve the privacy of taxpayers, and should even be published to help calculate the Gini coefficient and provide a basis for the adjustment of the threshold point.But this figure is mysteriously unpublished.At present, there are three recent information on the number of individual income tax payers. First, On March 9, 2015, Jia Kang, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and former director of the Institute of Fiscal Science of the Ministry of Finance, said in an interview with The Beijing Times that “very few people pay individual income tax now, only 28 million, accounting for less than 2% of the total population.”On the afternoon of August 31, 2018, after the closing of the fifth session of the 13th NPC Standing Committee, the General Office of the NPC Standing Committee held a press conference in the Guangxi Hall of the Great Hall of the People. Vice Minister Cheng Lihua said:”If the basic deduction standard is raised to 5,000 yuan per month, the proportion of individual income tax payers occupying urban employment will drop from the current 44 percent to 15 percent after the revision.”According to the National Bureau of Statistics, the number of employed people in China’s urban areas in 2016 was 424.62 million. That is to say, the revised law will reduce the number of individual tax payers from 186.83 million to 63.69 million, or 123.14 million.Finally, the State Administration of Taxation announced on November 30, 2018, “In October, the first month for the implementation of the personal income tax reform, individual income tax was reduced by 31.6 billion yuan, of which 30.41 billion yuan was reduced for wages and salaries. More than 60 million taxpayers before the reform no longer paid individual income tax on wages and salaries.”If we use the previous reduction from 44% to 15% to calculate that 60 million people account for 29%, then the current taxpayer is about 30 million, compared with 90 million before the reform.There is a big difference between 186.83 million, 90 million and 28 million, but I believe they are all real, but only part of the truth.First, the Treasury figure of 186.83 million is calculated backwards from the proportion of wages and incomes calculated by the OFFICE for National Statistics, so it is not surprising that there is a huge gap between the data and the real thing, tax.Second, it should also be true that 60m people in October reported income between the threshold of 3500-5000, and that the number of wage earners who paid taxes was said to have fallen by 60m after the 2011 adjustment.In addition to some of them who are really within this range, some of them have an income of less than 3500 but do not pay social security or the minimum standard of social security payment. After raising the threshold, they can not increase the amount of social security according to 5000, so they can avoid tax locally.Another a few is original income exceeds 3500 even 5000, all the time is taking the means such as list of bill to evade individual income tax, raise after starting point to raise this part can need not look for bill.Finally, Mr. Jia Kang said that 28 million tax payers in 2015 should be the number of tax payers at that time, but I think it is not possible for the number of income tax payers to rise to 60 million or 90 million in just three years.At the same time, there will be six deductions starting from 2019. Assuming that the taxpayer is his only child with one child and has a mortgage, the standard configuration, even if the mortgage and child support are shared equally with his spouse, the amount he can deduct every month is 2000+500+500=3000 yuan.And the threshold adjustment only 1500 yuan to reduce the taxpayer to the original one-third, then assuming that the threshold adjustment, China’s individual tax taxpayers from 90 million to reduce 60 million to 30 million, after the special deduction of how many people?Through other data comparison and verification: because the current income tax exemption in China is 60,000 yuan, plus special deduction, basically, the income of about 100,000 need to pay tax.According to the statistical bulletin on national Economic and Social Development in 2021 released by the National Bureau of Statistics, the per capita disposable income of Chinese residents in 2021 was 35,128 yuan, and the median per capita disposable income was 29,975 yuan.At the same time, the premier said that 600 million people earn less than 1,000 yuan in 2020. In the same group of statistics sources, 72.5 million people earn more than 5,000 yuan a month. If 3,000 yuan is deducted, that is, if the monthly income reaches 8,000 yuan, it is estimated that the number of taxpayers will be less than 40 million.If you consider the 3% tax rate of taxable income below 3,000 yuan, that is, the monthly income above 11,000 yuan, the number of people who pay more than 90 yuan of individual income tax per month is estimated not to exceed 20 million.Therefore, according to the current tax law, additional deduction of an annual income below one hundred thousand [(5000+3000)*12=96000 exemption amount + special deduction] people, more than a few children are not a cent tax reduction;If you earn 10,000 yuan a month and 120,000 yuan a year, you may lose only 360 yuan a year (1000*3%*12=360), which may be enough for a family dinner.Millions of annual salary is a year can reduce 5400 yuan (1000*45%*12=5400), can he a month of fuel money.The question is who should be financially subsidized?If regard all reduction duty exemption as broad finance allowance, so be equivalent to the government is providing allowance to high earner and to low earner inspect if have nothing.We all know that one of the basic ideas in economics is the principle of diminishing utility, that the more you consume the same product, the less utility you get, and that applies to money itself.The 5,400 yuan of a million annual salary may only be a less extravagant meal, while the 5,400 yuan of a low-income person may be the living expenses of a family for half a year or even a year.So in the absence of a widespread individual tax, such additional deductions could be a negative incentive.It’s like handing out a $50 ferrari voucher, and those who do care about it don’t use it.So what if you want to boost fertility by fiscal means?I think panzhihua is worth learning from.On July 28, 2021, Panzhihua City of Sichuan province held a press conference to announce and interpret in detail the “Sixteen Policies and Measures on Promoting human Resources Gathering” of Panzhihua City.In the New Deal, “for families with household registration in Panzhihua who have two or three children according to the policy, each child will be granted 500 yuan of parenting subsidy until the child is 3 years old”, which is the first and currently the only city to issue parenting subsidy.I think this subsidy is a more serious way to stimulate fertility than the additional deductions for child education and infant care.Although such “sunshine” subsidies cannot be precisely targeted at those in need, they are also available at the top of the income scale.But at least those who need it most receive subsidies, rather than special deductions for individual income, which give more to people with higher incomes.Of course, with the increase of national income, it is inevitable that the fertility rate will decrease.According to a report released by the National Bureau of Statistics on Monday, China’s population is expected to reach its peak soon, with 1.4126 billion at the end of 2021, an increase of 480,000 from the previous year and a natural growth rate of 0.034 percent.But because China is not a high-income country, if we still want to save the fertility rate, it may be a feasible way to give financial subsidies to families with multiple children.However, if you want to achieve this through the individual tax deduction method, I’m afraid it can only be the icing on the cake.Net source | observer original title: “in so doing, to improve the fertility rates have how old?”