Tax riots in China

The WSJ reports:

” . . . the disturbance followed aggressive collection of new charges for the use of machines used to make children’s wear, the town’s mainstay product. The tax was targeted at small, independent workshops that often aren’t licensed and are manned mostly by migrant laborers who earn money per piece produced.

“They said workshop managers were being charged between 300 yuan (about $48) and 600 yuan for each machine used, in what Chinese discussing the matter online called the ‘sewing-machine tax.’ It amounts to about twice as much as was collected in the past.”

http://online.wsj.com/article/SB10001424052970204505304577003503223216724.html?KEYWORDS=china+tax

It’s a lot easier for taxers to count sewing machines once than either (1) to measure production by counting each and every item that leaves the facility or (2) to measure piecework, maybe daily, payments to workers.   Was the sewing machine tax in lieu of a tax on production?  Maybe so, since the operators were reportedly unlicensed.  In any event, it was too effective.  And it targeted a narrow group that could identify its members.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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