China and the income tax
The WSJ notes the tiny proportion of government revenue that comes from the income tax in China:
China gets little money from the personal income tax, which provides 6.5% of government revenue. Most Chinese have never filed a tax return. By contrast, the income tax made up about 45% of the U.S. federal government’s total tax take in the fiscal year that ended in September…Most of China’s tax revenue now comes from the value-added tax, or VAT, a flat 17% levy on most production, and from the corporate income tax. Instituted in their current forms in a fiscal overhaul in 1994, both taxes are paid by companies and other organizations rather than individuals…
This year, only those who earn a monthly salary of 2,000 yuan, about $280, or more must pay income tax, up from 1,600 yuan a month before. Officials trumpeted the change as evidence of the government’s response to the concerns of ordinary workers. China’s minister of finance, Xie Xuren, estimates the higher exemption means about 30% of the country’s working population will be required to pay income tax this year, down from roughly 50%. Yet the government will give up only 30 billion yuan ($4.17 billion), in revenue, about 9% of what it took in income taxes last year…
Salary taxes, the main form of income tax, are withheld from monthly paychecks, so the new filing requirement aims to capture those who earn significant income from ownership of real estate, corporations or other assets. The requirement applies only to those earning more than 120,000 yuan a year, equivalent to about $16,700, or roughly six times the average urban income. No one knows how many people there are in China whose true incomes are above that level, but only 1.63 million people turned in the forms last year, almost certainly a small fraction of the total.
If you do the arithmetic, the “average urban income” in China is about $2700 a year. In the US, the range of “average urban incomes” is somewhere in the area of $38,000-$60,000, depending on a number of factors.