The world's funniest economics stories

Chapter 19 Can the visible hand control the invisible hand (1)——
Fiscal Economics

1. California from "rich" to "negative" - ​​fiscal deficit
There is a special chapter in the bankruptcy law of the US federal government - government restructuring bankruptcy protection.In the United States, since the implementation of the government restructuring bankruptcy protection procedure in 1937, the governments of 600 regions have used this procedure to "survive disaster". On December 2008, 12, the California state government declared a financial emergency.According to statistics, the state's fiscal deficit increased to $1 billion within 18 months.

According to the state's "self-financing" law, the largest economy in the United States - the state of California, facing bankruptcy, finally chose to apply for government bankruptcy protection without state support and assistance.With such consistent actions, the entire state of California instantly saw a chaotic situation where government bond investors lost their money and the people were struggling in the whirlpool of layoffs and tax increases.As a result, California fell from the peak of "rich" to the trough of "negative".

Fiscal deficit is the difference between fiscal expenditure and fiscal revenue. It is called fiscal deficit because it is treated with red letters in accounting.It reflects the income and expenditure of a country's government.Fiscal deficit is a manifestation of fiscal revenue and expenditure failure to achieve balance, and it is a worldwide fiscal phenomenon. In contrast, when the government's fiscal revenue is large and expenditure is small, the difference that occurs is another kind of fiscal failure. Balanced performance is called a fiscal surplus.For governments, there are deficits and surpluses as long as there are revenues and expenditures.

Facing the increasingly complex world economic situation, the governments of many modern countries are accustomed to "eating more than they need".However, during the 8 years when the famous American President Clinton was in charge of the White House, the United States experienced a fiscal surplus rarely seen in history.

Employment is one of the important factors to increase people's income.Clinton, who knows this well, has worked hard to create jobs for the people since he took office.Therefore, during this period, the employment situation in the United States was very gratifying.In order to increase the government's fiscal revenue, Clinton, who is good at grasping market timing, decided to increase taxes at a critical moment when the increase in per capita income in the United States had stagnated for many years and had just started to rise.As a result, the US federal government has experienced a large-scale surplus in revenue.

A long-term fiscal surplus can improve people's living standards, but a long-term fiscal deficit will increase the burden on the national economy.But at the moment, many countries in a state of economic growth need a lot of wealth to solve a large number of problems, so most of the governments of the countries are running fiscal deficits.From this we can see that the fiscal deficit seems to be an unavoidable problem.However, within certain limits, fiscal deficits can also stimulate economic growth.

For the fiscal deficit, there are two warning line standards in the world.First, the proportion of the fiscal deficit should not exceed 3℅ of the gross national product, otherwise fiscal risks will arise.For example, if a country's gross national product is 30 trillion yuan in a certain year, once the country's fiscal deficit exceeds 9000 billion yuan, it will exceed the warning line.Second, the government's fiscal deficit cannot exceed 15℅ of the total fiscal expenditure.That is to say, no matter how tight a country's operating funds are, its debt cannot exceed the percentage of 15℅.

Like China, many countries in the world use the issuance of national debt to solve the fiscal deficit problem.The purpose of the government to do this is to promote the country's economic growth by issuing national debt, and then use the funds earned from investing in national debt to pay off the national debt.However, for the debts that the government has to repay, it is finally paid by every taxpayer.If taxpayers don't pay enough tax, the next generation of taxpayers will have to pay it back.In fact, the national debt issued by the government is to spend future money today.

Ways to make up for the fiscal deficit:
Using the surplus over the years is to use the surplus formed by fiscal revenue exceeding expenditure in previous years to make up for the fiscal deficit.

Increase taxation, increase taxation includes opening new taxation, expanding tax base and raising tax rate.But it has considerable limitations and is not a reliable way to cover fiscal deficits:

Issuing additional currency is a method to make up for fiscal deficits, and many developing countries still use this method so far.But issuing more currency will cause inflation.

It is a common practice in all countries in the world to issue public bonds to make up for fiscal deficits.This is because from the perspective of the debtor, public bonds have the characteristics of voluntary, compensable and flexible; from the perspective of creditors, public bonds have the characteristics of safety, profitability and liquidity.

2. Why do smokers not reduce but increase--tax rate
During the reign of Emperor Wu of the Han Dynasty, a "computation order" was promulgated, that is, the property tax and vehicle and vessel tax of merchants and handicrafts were collected.Later, in response to many people's concealment and false reporting, Emperor Wu of the Han Dynasty issued a "communication order" again to crack down on merchants who frequently evaded "counting".

The "reporting" movement in full swing finally changed the nature of money taxation: the scope of taxation originally focused on cash and vehicles and boats was expanded to include all property including fields, slaves, and livestock.In this way, the calculation of taxation is to convert all property into cash at a certain price to serve as the tax base.In addition, the taxation that was originally "set up only for merchants and merchants" was later expanded to "everyone who has savings, they are hidden by the company, not only merchants and merchants."

With the continuous expansion of the scope and objects of taxation, many middle-class families of merchants have declined.A turbulent "reporting" movement that lasted for nearly 10 years, although it increased the government's revenue, it played a certain blow to the big businessmen, but at the same time it also hindered the development of private industry and commerce.

Emperor Wu of the Han Dynasty passed the calculation order and began to collect property tax and vehicle and vessel tax on merchants and handicraftsmen.However, due to changes in the nature of taxation in the actual implementation, the tax rate was set too high, which directly damaged the income of the people and lowered the living standards of the people.And the tax base is too broad, the tax rate is too high, and ultimately affect the sustainable development of the entire country's economy.

The tax rate is the quantitative relationship or proportional relationship between the tax amount and the taxable object, and refers to the scale of taxation.my country's current tax rates can be divided into three types: proportional tax rate, fixed tax rate and progressive tax rate.Usually, the tax rate is an important basis when collecting taxes.For example, there is an unwritten rule in the United States: when guests are invited to dinner with public funds, they must pay 50% of the meal tax.Here, 50% is the tax rate.

In addition, through changes in tax rates, the government can make effective adjustments after clearly understanding people's consumption behavior and habits.We can understand the regulatory effect of the tax rate through the adjustment of the tax rate of cigarettes.

自2009年5月1日起，经国务院批准，财政部、国家税务总局对烟产品消费税政策作了重大调整：甲类香烟的消费税从税率由45％调整到56％，乙类香烟由30％调整到36％。

We all know that although every pack of cigarettes is marked with the words "smoking is harmful to health", although more and more medical research shows that the harm of smoking to the human body is no less than that of epidemic diseases.But in life, the number of people around us who smoke as a hobby has not decreased.According to incomplete statistics, the annual direct loss caused by smoking in China is 1400 billion to 1600 billion, and the indirect loss is 800 billion to 1200 billion.Facts have proved that raising the tax rate of cigarettes is one of the most effective ways in the tobacco control actions of countries all over the world.Raising the tax rate of tobacco products will not only increase the government's fiscal revenue, but also save the lives of millions of people.As the tax rate of tobacco products increases, the price of cigarettes will also increase accordingly.In this way, the chances of young people, minors and low-income people smoking are reduced, which can be said to kill two birds with one stone.

However, improving the effect of killing two birds with one stone with tobacco products can only be classified as an ideal in reality.Around us, after the tax rate on tobacco products was increased, the number of "smokers" has not decreased.Smokers who are already addicted to smoking have a considerable demand for tobacco products, and a simple price increase cannot essentially inhibit it.It can be seen that to curb smoking, it is not enough to rely solely on the economic lever of taxation.

Raising the tax rate can increase fiscal revenue while at the same time inhibiting the sale of related products to a certain extent, while lowering the tax rate also has a very obvious effect on the country's economic development. In 1973, the U.S. economy entered a depression period after the oil crisis.After President Reagan came to power, faced with the "Dunkirk economic retreat" of the United States, in order to revitalize the American economy, he withdrew from the tax cut policy and stimulated investment and economic development by reducing corporate tax rates.This move not only revived the US economy, but also boosted the confidence of Americans.

From the 20s to leaving the White House in 80, Reagan was in politics for 1989 years, and the U.S. economy entered prosperity from the initial depression.Before leaving the White House, the top tax rate in the United States has dropped to 8%, and the unemployment rate has dropped to 28%.

As an important economic lever, tax rate and taxation can promote economic development and improve people's living standards only if they are used rationally. "Everyone is responsible for the rise and fall of the world." On the issue of tax rates that are related to our own interests and the economic development of the country, not only the makers of tax rates, but every ordinary person should pay close attention to them.

Tax preference refers to the general term of various preferential treatments given to taxpayers and tax objects by the state in terms of taxation. It is a form in which the government reduces or reduces the tax burden of taxpayers according to the intended purpose through the tax system.

The tax base is the tax base.It has two meanings: one refers to the economic basis of a certain tax, for example, the tax base of turnover tax is turnover, the tax base of income tax is income, and the tax base of real estate tax is real estate, etc.; The basis or standard for paying tax, that is, the basis or standard for tax calculation, such as the turnover in business tax.

3. The sharp weapon of wealth division - income tax
In Chinese history, Wang Mang and the "Wang Mang Regime" he established are well known to future generations.In 8 AD, Wang Mang, who ascended the throne of emperor, changed the name of the country to "Xin".

In AD 9, facing the opportunity of the country's initial establishment, Wang Mang formulated a series of economic reform policies, and established a tax "tribute" to be collected on the net operating profits of industrial and commercial persons.

"Hanshu Shihuo Zhixia" records: "Everything is taken from all things, birds, beasts, fish, turtles, and insects live in mountains, forests, waters, and livestock herders, funeral women mulberry silkworms weaving and spinning textiles to repair seams, craftsmen, doctors, witches, divination and other methods Merchants, merchants, merchants, and homes in Lieli districts all occupy their own possessions. The officials who are located in their places, remove their bases, count their gains, and take one of them as a tribute. Dare not to occupy themselves. Those who take possession of themselves but do not rely on the truth, do their best to take what they have, and become a county magistrate for one year."

The general meaning of this passage is that anyone engaged in gathering, hunting, fishing, animal husbandry, sericulture, weaving, sewing, darning, divination and fortune-telling and other entertainers, as well as business operators, must deduct the cost from their operating income , Calculate the net profit, pay tax according to one-tenth of the net profit, declare freely, and the officials will verify it. If there is no report or false information, all income will be confiscated, and the offender will be arrested and fined for one year of hard labor.

At the beginning of the founding of the People's Republic of China, in order to quickly restore the economy, Wang Mang required people from all walks of life to pay "tribute". Judging from the elements of the tax system, it already has the characteristics of income tax.Specific analysis shows that in Wang Mang's "tribute", the taxpayer is the person who engages in various business activities and obtains net income, and the tax rate is 10%.Taxpayers declare by themselves, officials verify, and there are corresponding penalties for violators.

(End of this chapter)