He Jianbing Calls For Tax Cuts to Offset U.S. Cuts

Chinese economic commentator He Jianbing calls for lower tax cuts to spur economy and now, to match the competitive threat posed by U.S. tax reductions. This is the top story in iFeng's finance section today.

Yang Ma [PBoC] has been working hard

Finance and taxation is never proactive

The author has long criticized the passive fiscal and taxation policies of the fiscal and taxation departments as early as three and a half years ago.

Have you remembered? In 2014, the international oil price plummeted. The NDRC must issue a fuel tax every time the oil price is lowered. After the third opening of the certificate, the author couldn’t bear to write an article that “the fuel tax has eroded the active monetary policy” and publicly criticized the fiscal policy. After the oil price was lowered, the fuel tax was not re-issued. (The finance and taxation department has prepared an article to refute my opinion. All the experts who asked the reporter to interview can't refute my article. The reporter finally asked me how to refute my article, which is very funny.)

The author’s criticism of the finance and taxation department in that article is still destructive to the so-called fiscal and taxation people’s rebuttal of Xu Zhong’s article: any country or region will generally adopt a proactive fiscal policy and a loose monetary policy in the face of economic downturn. Supported use, at least one party is enabled, but the other party cannot be dragged. From the past year or so, the monetary policy implemented by the central bank has been called “stable” and it has been positive and accommodative; the slogan of fiscal policy is “positive” and it is actually stable or even negative.

The importance of oil prices is well known, and the significance of falling oil prices is also evident in economic growth. On January 17, Ma Jun, chief economist of the Research Bureau of the People's Bank of China, said at the Hexun Finance Annual Meeting: "The estimated result of the CGE (general equilibrium) model is that if the average annual oil price is reduced by 10%, China's average annual average Real GDP growth can be increased by 0.12 percentage points.” Mr. Ma Jun’s model apparently did not calculate the oil price drop. The Ministry of Finance raised the fuel consumption tax three times. The gasoline consumption tax increased from 1 yuan/liter to 1.52 yuan/liter, and diesel fuel from 0.8 yuan. /Leng increased to 1.2 yuan / liter.

In this way, although the price of oil has fallen, but with taxation, the price drop of oil is limited. The tax increase is a serious fiscal austerity policy in any country, which will inevitably reduce the positive monetary policy. What is more deadly is that it greatly reduces the monetary policy space.

Later, the author once wrote an article clearly stating that the fiscal and taxation policies dragged the central bank's monetary policy.

The author's "The Truth of Finance" and "The Illusion of the Economy" have three chapters calling for tax cuts. The author has called for a decade, and President Trump has cut taxes. What surprised me is that Trump advocated the right The tax claim is the same as the one I called for China's tax cuts in 2014. In the end, although it was revised by the Senate and the House of Representatives, Trump's tax cut is a real tax cut. I have repeatedly called for the key to lowering the tax. Not at the threshold, but to lower the tax rate, they did it, and started it earlier this year.

At the moment, the US tax cuts will allow many US-funded and foundry companies to return to the United States. Foxconn has invested $10 billion in the United States to establish factories. The tax rate war is the key to determining the Sino-US economy. Foxconn’s factory went to the United States to pay taxes in the United States; China’s tax rate is high, but the $10 billion factory pays a tax amount of zero in China, which pays taxes in the United States, which increases the tax base of US taxes. This is a very objective understanding of Laffer's law, and lowering the tax rate can increase taxes.

Mr. Cao Dewang, the founder of Fuyao Glass, has long said that in addition to the high labor costs, the United States is much cheaper than electricity, oil, raw materials, etc., and the taxes are much lower.

With the overheating of the US economy, the Fed has no suspense in raising interest rates. Interest rate hikes and tax cuts will allow US companies to turn profits back to the US, and global manufacturing will return to the US.

Similarly, the forum that Mr. Fan Jianping predicted five years ago:

I clearly remember that Mr. Fan said with anger at the time that the finance and taxation department was insatiable, and that the economic downturn was difficult, not only without reducing taxes and fees, but also levying levies.

Xu Zhong said that it must be correct. In recent years, there have been many tax reduction policies, but enterprises and residents lack a real sense of gain, and some corporate tax burdens have not decreased.

Do you have to wait until the companies have moved to the United States to expand the US tax base, and there is no land expropriation?