Comparison of comprehensive tax burden between Chinese and American manufacturing

The manufacturing industry is China's “large taxpayer”. Although it operates at a low profit level of 10%-15% all the year round, it has maintained its position as the largest tax industry in China. It is no wonder that some manufacturing entrepreneurs are over-heavy and hope that the government will reduce the burden on enterprises.
Zong Qinghou, chairman and general manager of Wahaha Group, mentioned in his speech that although the reform and tax increase has reduced taxes, the taxes and fees of their own companies have not decreased, calling for lowering the tax burden of enterprises and making enterprises profitable.
Cao Dewang, the chairman of Fuyao Group, which invested and built a factory in Ohio, is even more blunt: "The comprehensive tax burden of China's manufacturing industry is 35% higher than that of the US, and the profit of making factories in the United States is higher than that of China."
Cao Dewang’s “comprehensive tax burden” refers to the proportion of various expenses paid by enterprises to income, including not only the payment of taxes, but also various administrative fees and fund charges related to government revenues. The actual level of taxes and fees.
Compared with the United States, is there a problem with the overall tax burden of China's manufacturing industry? Now let us find out.
I. Comparison of China-US manufacturing tax burden 1. How much tax should be paid by Chinese and American companies The main types of taxes paid by US companies are corporate income tax, which is levied at the federal, state and local levels, and there is no value-added tax.
US companies are subject to a federal corporate income tax rate of one of the highest in the world, up to 35%, which is 35% of the company's profits.
Don't look at the scary tax rate. In fact, the US manufacturing company's tax revenue is 38.9%, plus the government's administrative fees, the comprehensive tax rate is about 44%.
In addition, the US tax does not include the profits that the company has established to distribute to its subsidiaries outside the United States, which means that the profits made by the company abroad do not enter the United States, and the US government does not collect taxes.
The taxes levied by China on enterprises are more complicated. According to Li Chunyu, an associate researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences, according to incomplete statistics, there are more than 10 kinds of taxes and fees related to Chinese enterprises, including corporate income tax, value-added tax, urban construction tax and education surtax.
Among them, corporate income tax and value-added tax are the “big heads” paid by the company.
According to the 2008 Income Tax Law of the People's Republic of China, the general corporate income tax rate is 25% of the taxable income; and in terms of value-added tax, according to the regulations of the Ministry of Finance, China's current VAT maximum tax rate is the product value-added amount (small-scale tax payment) 17% except for people, the lowest is 3%.
According to the latest report released by the World Bank, in 2016, the proportion of tax revenue of manufacturing enterprises in China reached 45.3%, and the comprehensive tax rate of various government administrative fees and fund fees reached 68%.
Of course, China's tax laws also stipulate various tax incentives: for example, for small and profit-making enterprises that meet the conditions, the enterprise income tax will be levied at a reduced rate of 20%; for high-tech enterprises that need to be supported by the state, the tax rate will be reduced by 15%. Wait. Compared with the United States, the comprehensive tax burden is 19% higher.
2. The proportion of corporate taxation in fiscal revenue is in the United States. Although corporate taxation is important, it is not the most critical part of fiscal revenue. In 2016, the US federal income accounted for about 35% of personal income tax, social security accounted for about 30%, and corporate income tax accounted for about 7%. Corporate taxation accounts for a small portion of government revenue.
In the fiscal revenue of state and local governments, corporate taxation accounts for a small proportion, only 1.55%. In addition, the state government in the United States attaches great importance to employment. In order to promote employment, it often gives preferential tax policies to enterprises. For example, property tax concessions are valid for 30 years. If the company reaches production, it will give 30 million US dollars in tax relief within 30 years.
In China, corporate taxation accounts for a large proportion of government revenue. In 2016, the tax paid by enterprises accounted for 60.1% of the government's fiscal revenue, and the proportion was much higher than that of the United States. The tax burden of Chinese enterprises can be seen.
Taking into account other informal cost apportionment and the arbitrariness of the taxation process, the actual total tax paid by Chinese companies should be higher, and the production development environment of Chinese companies is much more difficult than that of American companies.
Second, the cause of China's manufacturing industry comprehensive tax burden remains high <br> China's manufacturing industry comprehensive tax burden is caused by many reasons.
On the one hand, it is completely different from the way in which the United States uses households and individuals as the “big head” of taxation. Corporate taxation is the main source of government revenue and is also the long-term taxation method in China. Reducing corporate taxation means increasing the proportion of personal income tax collection to a certain extent. This is still difficult for the public to accept in China.
On the other hand, the degree of taxation in China is still far from sufficient. Up to now, China only has the "Enterprise Income Tax Law", the "Tax Collection Management Law" and the "Car and Vessel Tax Law". The laws relating to corporate taxation, and the taxation of other enterprises including VAT are based on relevant interim regulations. Collected. Many economic issues have not yet been clearly planned, which also increases the difficulty for companies to reduce the cost of taxation through tax planning.
In addition, although the value-added tax as a “flow tax” does not increase the tax burden, it increases the burden on the manufacturing enterprise in actual production.
Comparing the two Chinese and American companies, even if the same amount of tax is imposed, Chinese companies will still feel that the tax burden is too heavy. The reason is that the value-added tax collected in China is generated in the production process of the enterprise. Even if the enterprise does not produce, it is buying. The raw materials have already started to pay taxes. Although the average income tax rate of US companies is as high as 39%, these taxes are collected after the company's profits, and companies do not need to pay if they do not make money.
In fact, a stable tax burden will stimulate the development of production to a certain extent, but too high a tax burden will become a burden on enterprises.
In the financial world, there is a term “death tax rate”, in which the tax will increase to a certain extent, the enterprise will go to death. At present, some processing enterprises on the southeast coast of China are in the midst of a high tax burden, and some have even lost their losses.
In view of this situation, in order to retain domestic manufacturing enterprises and to meet the challenges of the US “return of manufacturing industry”, it has become an urgent task to reduce the comprehensive tax burden of manufacturing in China and improve the comprehensive competitiveness of manufacturing.

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