China’s Inheritance Tax Aims at Middle-Class Families
Recently, media said that a few major reforms were written
into the agenda of an upcoming Third Plenary Session
of the Chinese Communist Party (CCP).
It includes pension, inheritance tax and housing tax.
Experts questioned whether the regime used the so-called
reforms to collect money but didn’t consider if the people could afford it or not.
Particularly the inheritance tax robs the middle-class
of property to balance the money shortage.
Rumors said that the pension, inheritance tax, and housing tax
would be discussed at the Third Plenary Session.
However, it was criticized by experts and the public.
Regarding the inheritance tax, it starts rather low at 800,000
yuan (USD $130,000) with rates ranging from 20 to 50%.
Under the proposal, a 10 million yuan ($1.6 million)
inheritance will pay a 50% rate, while 30 million will
cost 10.34 million yuan ($1.68 million).
Any unclaimed property will automatically go to the regime.
The cutoff is very low but the tax rate is very high.
Experts questioned whether the CCP is plundering
Chinese real estate tycoon Ren Zhiqiang posted on Weibo:
“This is most ruthless, it directly steals money.”
In some western countries, inheritance tax aims
at the minority – high income families.
It uses the tax to narrow down the wealth gap
and adjust the income distribution.
Xie Tian, Professor at Aiken Business School, University
of South Carolina: “The regime levies inheritance tax
from middle-class families and civilians.
From the view of Chinese people’s income,
the inheritance tax starts rather low.
From the recent banks’ shortage of money until now,
obvious theft of money from middle to lower class people
shows the regime is short of money
and is in a dangerous situation.”
US-based economist He Qinglian said that if people in urban
areas have property, once it is passed down to their children,
the children have to pay the inheritance tax.
Especially if young people who have lived with their parents
can’t afford the tax, they would possibly lose the house.
Sources said that according to the current market price,
it is easy to exceed 800,000 yuan ($130,000) value of a house.
In the US, the inheritance tax exclusion
started at 5 million in 2011.
For a couple, if they received an inheritance of USD
10 million, the tax rate was 35%.
In 2013, US Congress changed the exclusion to start
at $5.25 million.
In Japan, the government carried out fiscal reform in 2003,
the inheritance tax rate and exclusion amount were reduced.
The tax rebates were increased, so that asset transfer
to the next generation became more smooth.
In recent years, Canada, Australia, New Zealand,
Italy and other countries have successively
stopped collecting inheritance tax.
Hong Kong abolished the inheritance tax in 2006.
In addition, parents in countries with advanced finance,
insurance and trust industries, such as in the US,
can donate a large amount of property to hospitals
or a welfare foundation.
The successors must pay very high interest rates
on a regular basis until the donor’s posterity dies.
Only then can they truly receive the money.
In this way, the government can’t get any inheritance tax.
According to a survey on chinanews.com,
of 500 elderly who had registered wills,
70% of participants said that the inheritance tax exclusion
should start at least 10 million yuan ($1.6 million).
Compared with advanced countries’ inheritance tax law,
the CCP didn’t aim at very wealthy people, but at the middle
class, small-medium sized business owners as well
as working class families who worked hard to save money.
He Qinglian says that one can inherit from a spouse,
but the tax is much higher in China than in advanced countries.
The CCP refused to connect with other countries’ policies
of “double taxation relief” on inheritance tax.
Small sized private business assets being exempt from
inheritance tax is international practice,
but the Chinese regime didn’t take it.
Yang Zhizhu, Professor at China Youth University
of Political Science, says that China’s family planning
resulted in a lower birth rate, which gave the CCP
the opportunity to own 100% of unclaimed assets.
Yang Zhizhu: “The birth rate is declining every year,
and actually, 30% of the population has no descendants.
After two generations, 50% of the population
had no descendants.
The inheritance assets will certainly belong to the regime,
don’t they collect 100% inheritance tax on the assets?”
Yang also said that the CCP has many ways of stealing
people’s wealth, such as the huge penalty for an extra child –
“the social compensation fee” is a direct way
that the CCP robs people.