The world's funniest economics stories

Chapter 20 Can the visible hand control the invisible hand (2)
It is said that this kind of "tribute" enforced by the government has a certain role in promoting the construction of the country.For the stability of the people's livelihood, the people should respond positively.However, in A.D. 22, in the face of mass resistance from the people, Wang Mang was forced to decree tax exemption.It turned out that the "tribute" collected by it was too wide and the collection method was too complicated, which was not conducive to operation or management, which led to many conflicts between officials and the people, so that shortly after the people revolted, in 24 AD, the Wang Mang regime broke down. Ended in destruction.In the end, Wang Mang ended up ruining his country, but the "tribute" he pioneered "without the name of income tax, but with the reality of income tax" is in essence what is called "income tax" today.

Income tax, also known as income tax and income tax, refers to a type of tax levied by the state on various incomes of legal persons, natural persons and other economic organizations within a certain period of time.Generally, it can be divided into two categories: personal income tax and corporate income tax.

If we want to know income tax, we can only first understand what "income" refers to.From an economic point of view, income refers to the net added value of people's economic ability expressed in money between two points in time.Therefore, in real life, income from elements such as wages, profits, rents, and interest, and property income from gifts, inheritances, and property appreciation all fall within the scope of “income.”

In order to achieve a certain adjustment purpose and redistribute social wealth, the collection of income tax can affect the distribution of interests in all aspects, and objectively affect the behavior of taxpayers.And when the social distribution is unfair, or the gap between the rich and the poor is too large, the collection of income tax can play a good balancing role.

Personal income tax is one of the effective ways to adjust income and reduce the gap between rich and poor, and it is also the tax that is most closely related to us in real life.Personal income tax is generally progressively levied in name, that is, the tax rate increases with the increase of personal income. Low-income earners use low marginal tax rates, and high-income earners use high marginal tax rates.At the same time, personal income tax also implements standard deduction and individual deduction. The deduction decreases with the increase of personal income. Low-income earners deduct a high proportion of income, while high-income earners do the opposite.In this way, through the progressive tax rate and standard deduction, the purpose of progressive collection and narrowing the gap in personal after-tax income is achieved.

2007年12月29日第十届全国人大常委会No.30一次会议上，代表们表决通过了关于修改个人所得税法的决定。即从2008年3月1日起，我国个税免征额从每月1600元上调每月2000元。根据不同的征税项目，个人所得税还分别规定了三种不同的税率：
[1] Income from wages and salaries is subject to 9 levels of excess progressive tax rates, and tax is calculated on the basis of monthly taxable income.The tax rate is divided into tiers according to the taxable income of each person's monthly wages and salaries. The highest level is 45%, and the lowest level is 5%. There are 9 levels in total.

[2] 5 levels of excess progressive tax rates.The production and operation income of individual industrial and commercial households, which is applicable to annual calculation and monthly prepayment of taxes, and the annual income payable for the contracted operation and leased operation of enterprises and institutions, the lowest level is 5%, and the highest level is 35%. Level is 5%, a total of [-] levels.

[3] Proportional tax rate.Personal income tax is levied on a case-by-case basis for personal income from author remuneration, income from labor service remuneration, income from royalties, income from interest, dividends, bonuses, income from property leasing, income from property transfer, occasional income and other income, and a proportional tax rate of 20% is applicable .Among them, a proportional tax rate of 20% is applicable to income from author remuneration, and a 30% reduction is applied to the tax payable; for labor service remuneration income that is abnormally high or extremely high, in addition to being taxed at 20%, a bonus can also be implemented Levy to protect reasonable income and limit unreasonable income.

The main content of personal income tax:

income from wages and salaries;
Production and business income of individual industrial and commercial households;
Income from contracted and leased operations of enterprises and institutions;
Income from labor remuneration;
remuneration income;
Income from royalties;
Income from interest, dividends and bonuses;
Income from property leases;
Proceeds from transfer of property;
casual income;
Other income determined by the financial department of the State Council.

4. Why the Merchant of Venice was rescued in the end--interest and interest rate

Shakespeare is a famous writer in the world.In his works, many vivid characters have left a deep impression on us.This is the case with the image of Antonio and Shylock, the deadly rivals in the script "The Merchant of Venice".

In order to help his good friend Bassanio marry the famous noble lady Portia, the Venetian merchant Antonio borrowed 3000 gold coins from the usurer Shylock in his own name.

Because, in normal times, Antonio is a helpful businessman. When someone borrows money from him, he does not charge interest, so everyone likes to associate with him.And his behavior has invisibly affected the interests of the loan shark Shylock.Therefore, Shylock has been looking for opportunities to revenge Antonio.When Antonio offered to borrow money from Shylock, Shylock readily agreed.Shylock was very generous and said that no interest would be charged, as long as Antonio wrote down the IOU and stipulated that the loan period would be 3 months. a pound of meat.In order to solve his friend's problems, and thinking that his cargo ship would return in two months, Antonio signed a loan agreement.

Unfortunately, it happened at this time.Antonio's merchant ship encountered a storm at sea and has never been found.All of a sudden, Antonio suffered a huge loss, and the loan could not be repaid as scheduled.So Sherlock took the opportunity to take him to court.According to the contract, Antonio will be punished by Shylock cutting off a pound of his body.

The smart and beautiful noble lady Portia heard about Antonio's lawsuit.In order to save her sweetheart's friend, Portia disguises herself and comes to Venice as a lawyer.In court, Portia told Shylock that he could take any pound of Antonio's body, but if a drop of blood was left, Shylock would pay for it with his life and property.Because Antonio's loan contract only wrote a pound of flesh, and did not promise to give Shylock a drop of blood.Finally, the court announced that Shylock had murdered the citizens of Venice, confiscated part of his property, and Antonio was released.

Although many people have different opinions on the central idea of ​​Shakespeare's famous work, from an economic point of view, the concept of "interest" is involved in the story.

Interest is a certain remuneration paid by the borrower for the funds obtained from the lender in order to obtain the right to use monetary funds.As the price of accessing currency or the reward of lending currency, interest is actually the "price" of borrowed funds.And the level of this "price" [interest] is expressed through the interest rate.

Interest rate refers to the ratio between the amount of interest and the amount of money borrowed or savings deposits for a certain period of time.

Next, let's take a closer look at the reasons for generating interest.

[1] Delay consumption.When lenders lend money, they delay consumption of consumer goods.In terms of preferences, most consumers prefer actual commodities more than future commodities, so there will be positive interest rates in the free market.

[2] Expected inflation.Inflation is a very common phenomenon in economic activities.When inflation occurs, representing a certain amount of money, there will be fewer goods that can be purchased in the future than now.Therefore, the borrower must compensate the lender for the loss during this period.

[3] Alternative investments.Lenders can choose to put the money in other investments.When the lender lends the money, it means giving up the possible return on other investments, and to a certain extent, the current opportunity cost is lost.

[4] Investment risk.Borrowers are always at risk of going bankrupt, absconding, or defaulting on their debts, in which case lenders need to collect extra money to ensure that they are still compensated in these cases.

From the above reasons, it can be seen that the generation of interest is directly related to the market and economic activities.From this, the interest rate is extended. The interest rate is determined by the relationship between supply and demand at a certain point in time through the market and the law of value mechanism. Therefore, it can truly reflect the cost of capital and the relationship between supply and demand.But in practice, interest rates are regulated directly by the central bank in order to make the interest rate as best as possible to adapt to market changes.

In real life, each of us, no matter what kind of occupation we are in, will eventually encounter some savings and borrowing situations.Therefore, it is necessary to understand the method of calculating interest.

Simple interest and compound interest are two common cases of interest.The calculation method of simple interest is relatively simple, and the interest burden on the borrower is also relatively light. It means that when calculating the interest amount, the interest is only calculated according to the principal, and the interest amount is not added to the principal for double calculation.Usually we use I to represent the interest amount, P to represent the principal, r to represent the interest rate, n to represent the loan time, and S to represent the sum of principal and interest.The formula can be expressed as: I=P×r×n, S=P×[1+r×n]
If a bank provides a 5-year loan of 10 million yuan with an annual interest rate of 200% to an enterprise, the interest payable by the enterprise at maturity is:
I=P×r×n
=200 million yuan x 10% x 5
= 100 yuan
The principal and interest are:

S=P×[1+r×n]
=200 million yuan×[1+10%×5]
= 300 yuan
Compound interest refers to the method of recalculating interest by adding the interest amount calculated on the principal to the principal.This method is more complicated, and the interest burden on the borrower is also relatively heavy, but considering the time value of funds, it protects the interests of the lender and is conducive to the efficiency of using funds.Expressed as:
I=P×[[1+r]n-1]
S=P×[1+r]n
If the conditions in the previous example remain the same, the interest payable by this enterprise at maturity is calculated according to compound interest:

I=P×[[1+r]n-1]
=200万元×[[1+10℅]5-1]
= 122.102 yuan
S=P×[1+r]n
=200 million yuan×[1+10℅]5
= 322.102 yuan
Loan interest discount refers to the small amount of guaranteed loans used for low-profit projects will be fully discounted by the finance department according to the facts, and the borrower will not pay interest during the loan period, and the maximum discount will not exceed 2 years.

5. Why did Ronald Reagan only make four films--The Laffer Curve
During World War II, the famous President Reagan worked as an actor in a film company.It is said that this experience had a profound impact on him, and the economist Laffer's theory also gained a deeper understanding and more affirmation because of Reagan's film career.

In January 1980, President Reagan, who had just passed the election, was arranged to attend several economics classes with a group of people in the campaign team to learn some economics knowledge necessary for governing the country.And the first one to teach President Reagan was Laffer.Taking advantage of this great opportunity, Laffer greatly promoted the "Laffer Curve" theory on taxation that he had researched to Reagan.

The more Laffer talked, the more excited he became, and when he said that "people are not willing to work when the tax rate is above a certain value", Reagan stood up even more excitedly.He said to Laffer with certainty: "That's right. During World War II, I was working as a movie actor at Big Money. At that time, the surtax on wartime income was as high as 90%. We only needed to make four movies to reach this level." One tax rate range. If we make a fifth film, then 90% of the money earned by the fifth film will be paid to the state, and we will hardly make any money. So, after making four films, we choose to Travel abroad instead of working.”

The "Laffer Curve" theory was widely disseminated under Reagan's "appearance".

Because of his special experience and feelings in his film career, President Reagan was able to understand and accept Laffer's economic theory better.Therefore, after President Reagan came to power, he began to vigorously promote the tax cut policy.In this process, the "Laffer Curve" theory, which was not noticed at the beginning, also entered the elegant hall of the mainstream of economics because of the "tacit understanding" of Laffer and Reagan.

(End of this chapter)