Before the article begins, I must say that this topic is too complex. For now, I can only explain some basic concepts to everyone. I may write several more articles on this topic in the future, and we can delve into it more deeply over time.

First, we need to clarify a question: what exactly are direct taxes and indirect taxes?

Direct taxes generally refer to those that cannot be shifted, such as property tax, personal income tax, and the more famous poll tax. This was more common in ancient times when tax collection was difficult, so it was simple and crude. The tax was based on the number of people in a household.

The other taxes that can be shifted are called indirect taxes, the most common of which are tariffs, value-added tax (VAT), and so on. These taxes do not require taxpayers to pay directly, which is why they are called indirect taxes. For example, when an imported car is imported from abroad, it needs to pay tariffs. When consumers buy a car, the price of the car includes the tariffs, which is equivalent to being shifted to the consumer.

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If we want to be more intuitive, direct taxes are those that are deducted from your hands, such as personal income tax, which makes you feel very distressed. Indirect taxes are those that have already been included in the price of goods. If you don't study tax law carefully, no one knows how much tax is included in each product.

China is now mainly an indirect tax country, with the most important tax being VAT. This refers to the tax on products during the circulation process. Since it needs to be paid every time it circulates, to prevent double taxation, the downstream will require the upstream to provide tax payment proof.

This design is extremely ingenious. If the upstream does not provide proof of tax payment, the transaction cannot be carried out at all. The government almost does not need to watch the merchants, and the merchants will spontaneously supervise the upstream level by level. Of course, these taxes eventually become prices, which are ultimately borne by consumers. The following figure shows that VAT and corporate income tax are the two most important types of taxes in China, both of which are borne by enterprises.

Speaking of this, everyone should also see that the advantage of direct taxes is that they can be collected from each person, especially personal income tax and property tax. People with high income pay more, and those with low income pay less. People with expensive houses pay more, and those with cheap houses pay less. This is somewhat fair, and developed countries are basically dominated by direct taxes.

Looking at the history of the East and the West, there is a main axis. In ancient times, it was mainly direct taxes, that is, taxes on heads and land. Later, as commercial activities increased, commercial taxes began to emerge. After the mid-Qing Dynasty, China had tariffs, which gave the Qing Dynasty another fifty years of life.Indirect taxes in ancient times might be difficult for everyone to understand. Do you know about the state monopoly on salt and iron? This is a typical example of an indirect tax. The state levies heavy taxes on these commodities, and the common people have no choice but to buy them, indirectly increasing the state's tax revenue. Taking the late Tang Dynasty as an example, the taxes on salt, iron, tea, and alcohol accounted for more than half of the total national tax revenue.

Western countries also followed this process. In ancient times, they also relied on direct taxes, such as land and head taxes. Later, as commerce developed, they began to collect both direct and indirect taxes.

However, indirect taxes have a problem. For example, the value-added tax (VAT) mentioned earlier, although easy to collect, it leads to an increase in commodity prices, affecting circulation, and also puts too much pressure on businesses.

So, after Western countries became developed, they evolved to focus on personal income tax. In 1799, the British were the first to implement personal income tax. Now, personal income tax is the most important tax category in most Western countries because it is more refined, allowing those with higher incomes to pay more and those with lower incomes to pay less, which is relatively fair. For example, in the United States, the largest source of tax revenue is personal income tax.

Of course, this is about which tax is the "mainstay." No country only collects one type of tax, but it is said that developing countries generally focus on indirect taxes, while developed countries focus on direct taxes like personal income tax.

In other words, tax collection is also a matter of "state administrative capacity." Developed countries have strong administrative capabilities, and their citizens have higher incomes, so the collected taxes can cover the collection costs. Developing countries have weaker capabilities, and their citizens also have less money, so the benefits cannot cover the costs, so they have to choose a low-cost tax collection method, which is the tariff and VAT I mentioned earlier.

Why is it difficult to collect direct taxes? Because everyone's situation is different, the tax bureau must fully understand everyone's financial situation, which tests both data collection and administrative capabilities. If not handled properly, it can lead to excessive tax collection costs or even cause unrest. Many revolutions in the West were caused by taxes, and many rebellions in China were also caused by increased taxes.

In ancient China, the long-term tax collected was the head tax, and there was no tax on land, which sounds very unfair. So why did they do this? There are many reasons, one of which is that taxing land is too difficult. In ancient times, land measurement was already very troublesome, and the fertility of each piece of land was different. Some fertile land might produce ten times more than barren land in one acre. This complex calculation was impossible to bear in ancient times. Under the low management level, they simply taxed people's heads. If the poor and landlords had the same number of people in their families, they would pay the same amount of tax, which is very unreasonable, but there was no other way.

It was not until the Yongzheng period that the "spreading the head tax to the land" policy was implemented, abolishing the head tax and starting to collect land tax. The tax burden on farmers with less land plummeted, and the surplus money turned into population growth, leading to a population explosion in China. However, the agricultural tax in the Qing Dynasty was very rough, with almost the same tax rate for various types of land, but it was still much better than the head tax.

In the West, it was similar. The UK was the first to implement property tax, not by measuring everyone's houses one by one, but by counting the windows on the houses to reduce enforcement costs. This led to many ancient castles in Europe having very few windows, making them gloomy and terrifying. Only churches had large glass windows because the church enjoyed tax-exempt treatment.Nowadays, in order to collect taxes, countries have tried every possible means. Joseph Schumpeter believed that the emergence of modern states is closely related to the tax system. This is because the main task of the bureaucratic system in Europe was to collect taxes. Moreover, once you collect taxes from everyone, people will definitely inquire about where the money is going. The two cornerstones of modern society, the bureaucratic system and the awareness of citizens, have thus emerged.

Americans have delved deeper into this area, not afraid of difficulties, and are determined to levy taxes. Every year, it causes a lot of trouble, as everyone knows about their Internal Revenue Service (IRS). Americans say the only difference between this organization and the underworld is that they are "robbing with imperial orders" or "robbing with a license."

To encourage everyone to pay taxes actively, tax officials have come up with countless tricks. The most important point is to report and inform, which is very similar to the "Gao Min Order" during the Han Dynasty in our country (the character is pronounced "Min"). If you report others for tax evasion, you can receive a reward of 15%-30% of the confiscated money. The following picture is a screenshot of the IRS website, urging everyone to actively report tax evasion.

Once someone is found to deceive the tax bureau, IRS personnel will come to the door, similar to a commando team fighting terrorists, with a house search for tax collection, often scaring people out of their wits. However, the tax police don't care, as they are collecting taxes by imperial order.

In addition, they also implement various "tax incentives". If you pay taxes actively and rank high, you may even receive shopping cards mailed to you by the tax bureau.

Under this combination of rewards and punishments, the carrot and stick approach, the US tax system indeed operates much more smoothly than most countries. The proportion of voluntary tax payments in the United States is as high as 81% to 84%, compared to only 68% in Germany and 62% in Italy, which is really high. The main reason is that everyone is afraid of the tax bureau.

Speaking of this, there must be some friends who have been holding back for a long time. Aren't Buffett and Trump always not paying taxes? Is there a problem with their system?

In fact, the law is like a fence, which cannot stop everyone. What can be done is to try to make most people comply. Super-rich people can find lawyers and financial teams to help themselves with this matter, which is a problem that has no good solution in the world. However, many countries basically have even less wealthy people evading taxes.Speaking of this, everyone should understand why our country mainly levies taxes on the circulation link.

On the one hand, direct taxes have a problem: they are too painful to collect. Yes, it's like cutting flesh. If your salary is 10,000 yuan and you get 7,000 yuan, and if your salary is 100,000 yuan, you get 50,000 or 60,000 yuan, it's simply fatal, and it hurts to death. Many friends know that our country used to have an agricultural tax that lasted for thousands of years, which is a direct tax, and it was completely abolished in 2003.

On the other hand, the cost of collecting personal income tax is too high. You have to support a large number of tax officials to identify the income of the people one by one, and the workload is astonishing, so the work is very difficult to carry out. This is not just a problem in our country, but also in developed countries. In 1913, the personal income tax in the United States only accounted for 1.5% of the total tax revenue. After a hundred years of legal changes and the unremitting efforts of the tax bureau, it has finally been increased to more than 35%.

It is precisely because the collection of direct taxes is too difficult that most countries also shift from indirect taxes to direct taxes when the residents' income reaches a certain level.

Our country has not reached that stage yet, so the current tax burden in our country is mainly on enterprises. This is also why Cao Dewang said that the tax burden on American enterprises is lighter than that in China. Everyone should be able to understand this, because the taxes in the United States are mainly personal income taxes, which are borne by individuals, and the corporate tax is not high. China mainly has circulation taxes, and enterprises bear the main tax burden.

Overall, the overall tax burden of China and the United States is roughly the same. Taking 2019 as an example, China's fiscal revenue accounts for 28.14% of GDP, which is 4.5 percentage points lower than that of the United States, which is about 32.66%. However, we also have some hidden taxes, such as local governments' fiscal revenue is not based on taxes, but on land sales. The money from land sales also goes into the fiscal revenue, which is similar to taxes.

Moreover, direct taxes have an advantage, which is progressive. That is to say, the more income you have, the higher the tax. The highest personal income tax rate in our country is 45%, which is already very high, but there is a problem of widespread violations, such as Wei Ya's 1.3 billion yuan this time, which can be evaded. The welfare society in Northern Europe is even more excessive, reaching more than 50%. The foundation of their welfare society is also here. Of course, it is difficult for us to achieve the Northern European model, as the population size is there, and they are all countries the size of Zhumadian or Shanghai.

Indirect taxes are "regressive," which means the higher your income, the lower the tax rate. Because the poor may spend all their money every month, and the goods they consume all have taxes, so their tax rate is very high, possibly around 30%. However, the consumption ratio of the rich is very low, and most of the money is used to buy assets, and the final tax rate may only be 10%. The richer you are, the lower the tax rate.

In the past, it was said that the rich consumed a lot of luxury goods. If heavy taxes were imposed on luxury goods, could it increase the tax paid by the rich?

Later, it was found that it was overthought, because if the tax was too heavy, once it exceeded the price of an airplane ticket, many people would not buy domestically, but directly fly abroad to play and consume, making you unable to collect it. This is also why there was a period of time when luxury goods were taxed less, and many people said that this was a tax cut for the rich? In fact, it is not. For those who can go abroad at any time, customs duties are not a problem.This is also why developed countries have to transition to a system where direct taxes are the main source of revenue, because only in this way can income be regulated. Of course, the United States is an exception. You can check out TikTok, where many Chinese immigrants to the U.S. are now broadcasting, and they are also unwilling to let the government spend their money to help the poor. They believe that the poor should solve their own problems. In a country like the United States, as long as you are physically capable, you can find a job like bricklaying and won't be poor. They would rather hope that their property taxes can be used to build around the community, strengthen the surrounding police force, and so on.

In short, if direct taxes are strictly implemented, the tax burden on businesses and the poor will decrease, but the pressure on the middle class and the rich will increase, and the government's enforcement costs will soar. The status of accountants and lawyers will be further strengthened. Accountants in the United States are very wealthy, which is also related to this.

Subsequently, our country will certainly transition to direct taxes. If you pay attention to policy documents, you will find that the frequency of mentioning "direct taxes" has been increasing in recent years. With the completion of big data, the Golden Tax IV tax system, and the government's data networking work, the difficulty of implementing direct taxes is also decreasing.

After 40 years of rapid development since the reform and opening up, China is now facing huge problems. Many of the current issues are actually due to the beneficiaries bearing too little responsibility. These responsibilities should be reflected through taxes. In other words, the previous tax model is friendly to efficiency but not conducive to fairness.

The 18th National Congress mentioned "cleaning up and standardizing hidden income, abolishing illegal income, increasing the income of low-income earners, expanding the proportion of middle-income earners, striving to narrow the income distribution gap between urban and rural areas, regions, and industries, and gradually forming an olive-shaped distribution pattern."

However, these are all goals, what are the means?

First of all, it must be development. The premise of all problems is development. Talking about distribution without development is just bullying. In the process of development, by improving and implementing direct taxes such as property tax and wealth tax, strengthen the regulation of social wealth and the government's secondary distribution of welfare, and help those who come later.

Moreover, it needs to be solved through "scientific legislation and strict law enforcement," which is the rule of law. It is necessary to prevent the populism of "beating the rich," and to prevent the top echelons from feeling insecure about their property, which leads to a wave of wealth flight. As I mentioned earlier, if there is any way to quickly destroy a country's economy, it is undoubtedly to kill the rich and take their eggs.

If a hen lays ten eggs and you take one, that's a low tax rate. If you take five, that's a high tax rate. If you kill the chicken to see if there are any eggs in the belly, that's killing the chicken to take the eggs. In fact, you can't kill it, because they will run away quickly, and then foreign capital will flee on a large scale, and it will not come back in decades.

Not only that, but this matter will also destroy the most enterprising people. After all, if the wealth you have struggled for is gone, who dares to accumulate and struggle? In the end, as long as people in this country have money, they will send their wives, children, and family overseas, convert their assets into foreign currency, to prevent you from equalizing wealth. As soon as there is a slight wind and grass movement, they will flee on a large scale, and this country will basically be finished.So the best approach can only be the rule of law, ensuring the rights of vulnerable groups from a legal perspective, and also regulating the nearly unregulated chaos of the wealthy in the past from a legal standpoint, making them pay the taxes they should and fulfill the responsibilities they should.

Currently, both China and the United States are undergoing fiscal and tax reforms. One of the most important reform measures of Biden's administration is to tax multinational corporations and the super-rich. The problem faced by both countries is that the rich class takes too large a share of the cake. It depends on who can solve the problem without affecting development as soon as possible. However, judging from the current situation, Biden's side is almost in a mess, while our execution ability is obvious to all, so I have no doubt that we can solve the problem.