Earlier this month the government "raised taxes" on "the wealthy" (FocusTaiwan)...
Based on the concept, the tax reform package includes the creation of a new individual income tax bracket with a marginal income tax rate of 45 percent for people reporting annual taxable income of over NT$10 million (US$329,446) a year.This move taxes income, not capital gains, and only affects a tiny number of taxpayers who suffer an insignificant increase in their overall taxes. It is merely a PR move. Except for the reduction in the credit, capital income is not affected. Major tax dodges, such as the assessed value on real estate, remain unchanged. The minister claimed this will help income inequality -- probably in some tiny way, it will. But read your Picketty (I just finished it, fabulous book): as long as returns to capital exceed the overall rate of economic growth, then income inequality will worsen. Unless the government meaningfully tackles the pernicious problem of untaxed accumulated wealth, income inequality will continue to worsen.
Under the current tax code, the 40 percent rate bracket kicks in at a taxable income of more than NT$4.4 million.
The revision, if put through, is expected to affect around 9,500 people and generate an additional NT$9.9 billion in tax revenues.
In addition, the business tax for banking and insurance institutions will return to the previous 5 percent from the present 2 percent, which is expected to generate an additional NT$21 billion in tax revenues.
Also, the current tax credit afforded to individual shareholders receiving dividends would be cut by 50 percent and would generate more than NT$50 billion in tax revenues. All told, the increases will inject an additional NT$80 billion into national coffers.
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