China Worries U.S. Tax Cuts Will Work
A commentary in the People’s Daily, the official mouthpiece of the Communist party, attacked Trump’s plan to reduce taxes on companies and simplify swaths of US tax code, highlighting Beijing’s fears the move could harm businesses back home.
…While any change to US taxes still need to be approved by Congress, if Trump’s plan is approved it could see a wave of companies shift assets to the US from countries such as China.
“From the perspective of other countries, the US tax cut is in fact provoking a tax war,” the People’s Daily said. These cuts will “cause the international tax order to fall into chaos”.
…“In response, some powerful countries will join in this competition to reduce taxes … to set up tax havens,” it added. “Furthermore, the US tax cut will harm some export-oriented countries that are powerless to compete in tax reductions.”
It looks like the border adjustment tax is dead, but if that was included as part of a major tax reform and tax reduction, it would be even worse for exporters such as China.
Meanwhile, China is reducing personal taxes by increasing deductions:
Since July 1, 2017, the commercial health insurance personal income tax policy to promote the implementation of a nationwide. The relevant issues are now notified as follows:
First, on the policy content
Expenditures for personal purchase of commercial health insurance products are subject to tax deduction at the time of calculation of taxable income in that year, with a deduction of 2400 yuan / year (200 yuan / month). The unit shall collect the expenses of the employees who meet the stipulated commercial health insurance products for the employees, and shall be included in the individual salary salaries of the employees respectively, and shall be deducted according to the above limits.
2400 yuan / year (200 yuan / month) limit deduction for personal income tax law provides deductions other than the standard deduction.