Xu Shanda, former deputy director of the State Administration of Taxation, analyzed the First Financial Analysis on the 5th. The final US tax reduction resolution is definitely different from the original plan, but the tax cuts will not change. For China, which is planning and implementing China to reduce macro tax burdens, the challenge is even more severe. China’s tax cuts will be even stronger, and tax cuts must be advanced.
On the evening of June 5th, Xu Shanda shared his views on the global tax reform competition and China's supply-side reform at the "Hsu Shanda Supply Side Reform" reading meeting of the Shanghai Jiaotong University School of Advanced Finance.
"China needs to assess the impact of various taxes on the competitiveness of enterprises and individuals, and prioritize the taxation that is not conducive to the improvement of competitiveness, and reduce the negative impact." Xu Shanda said.
His response plan includes: speeding up the allocation of social security funds by state-owned capital to further reduce the social insurance rate and reduce the cost of employing enterprises; the 25% tax rate of corporate income tax remains unchanged, and further efforts to reduce the deduction of research and development expenses to improve competition Force; moderately reduce the personal margin of the working class by 45%, the highest marginal tax rate, and attract overseas high-end talent.
"The most influential of the Trump reform initiatives is tax cuts." Xu Shanda said.
Tian Guoqiang, dean of the School of Economics at Shanghai University of Finance and Economics, said at the meeting that Trump’s tax cuts would be difficult to achieve without cutting government spending. This is also a very big issue in the United States.
How to make up for the huge deficit caused by tax cuts? Yang Yanqing, the moderator of the conference, the dean of the First Financial and Economic Research Institute, and the deputy editor-in-chief of the First Finance and Economics, recalled that in the April annual meeting of the International Monetary Fund and the World Bank, the United States was facing tax cuts and future huge infrastructure projects. The main reason for the US Treasury Secretary’s response is that the tax cut plan will boost the US economy to 3%, corporate profits, and personal wages. Economic growth itself comes to “paying†for large tax cuts.
"But can the US economy really achieve a growth rate of 3%?" Yang Yanqing threw this question at the guests. Zhang Jun, chief economist at Morgan Stanley Huaxin Securities, is optimistic about the US economy, which he believes can be achieved. Tian Guoqiang believes that it is difficult for the United States to achieve a growth rate of 3%. Xu Mingwei, a researcher at the Shanghai Academy of Social Sciences, thinks it is very difficult. "The growth rate of the US economy is only about 2% this year. It will be slightly higher next year. It is very remarkable to have a growth rate of 2.4%."
Tian Guoqiang believes that the argument that “reducing taxes to stimulate economic growth to pay for tax cuts†is very controversial in the United States. In the last century, when US President Ronald Reagan implemented a large-scale tax cut, there was a similar statement, but in the end, the fiscal deficit was further expanded. .
Zhang Jun said that if Trump really implements the tax reduction plan, China must have measures. However, if the short-term hastily followed up, simply reducing the tax rate may do more harm than good, and China's tax cuts still need to focus on supply-side structural reforms.
Xu Shanda believes that in the global competition situation, the tax system itself is competitive. The tax system design must consider the impact on the competitiveness of enterprises and individuals. The importance of the tax system competitiveness factor even exceeds the tax adjustment income gap.
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