Taxes? Who pays taxes?

Taxes.  The above is not only a verbatim quote from China Wife, but mimics what probably most all Chinese say themselves, on any given day.    The only folks to my knowledge who pay taxes in China are state workers and workers of large factories(ie Foxconn).  Nobody else.   Certainly not the millions of restaurants, barbershops, or any 2nd or third tier supplier to a large company such as Foxconn. 

I have already written about how China is more worried about global prestige and power, as opposed to taking care of its own internal inefficiencies(such as drinkable tap water).   Yes, yes, every country has its own internal shortcomings, it is true.   But China needs to be singled out because China has over a billion people.   And that’s that. 

China could make up for its loss of GDP to corruption by simply making its tax collection more efficient, and modernized.  Yeah, I know China would have more tax evaders than it could handle.  Is there a nation where the people are more skilled at evading the “law” than China? 

How badly do Chinese dislike paying taxes?  Simple, look no more than to your local Chinese restaurant for your answer.  

We live in a slightly upper middle class neighborhood.  Great schools(fantastic schools), excellent sports teams, decent parks, great shopping……and nary a damn Chinese restaurant.   I’m probably 3 miles away from where I write this of 10 pizza or Italian joints.   A very good Japanese place.  Nice Mexican food.   But Chinese?  Nope.  Took us three years to find it.  The nearest good China Joint is about 6 miles from our house.   Still, that’s a lot closer than the twenty miles it takes to get to our local Chinatown. 

Our local China Joint is full of both laowai and Chinese.  A good sign.  The food is not fast food.  It is not a buffet.  And when we visit there is always a line.   The owner is Chinese and the cooks Chinese.  Mostly students busting their ass for god knows how little.   Still, the waitresses are chirpy, with smiles on their faces. 

Yet the local Chinese hate the owner.   Someday soon I hope to write a post about the propensity of Chinese to dislike laowai that speak Mandarin.  Likewise, Chinese cannot stand a fellow Chinese that wears a plastic smile towards us laowai while behaving as if he is better than his own people.  In China, that’s par for the course, but in America it’s a bit different.   The Chinese in most non coastal communities are a tight group and all know each other.   They know who the good people are and the pricks as well. 

And this particular Chinese restaurant owner was intensely disliked not because he did not contribute to the local community, nor take part, but because he went out of his way to show he did not have too.    
You see, he could be successful because all he had to do was pander to the local laowai, local Chinese be damned.  This is the real reason he was so disliked.  Not the reason everyone likes to give:  the fact he paid his waiters and waitresses and cooks disgustingly low wages. 

And what I’m sure this Chinese restaurant owner relishes more than anything else is the knowledge that his restaurant is the only game in town.  And those detractors?  Well, they have nowhere to go.  Nowhere to go but his place.  And he knows it.  And they know it. 

Alas, if only the laowai knew.   A family of 4 costs approximately $40.  The food is good enough.  But when the bill came I was shocked to see a waiter tell my wife “付现金打九折”.
My ears perked up. My wife readily agreed. 

In China, in nearly every single restaurant a customer gets the option of a slight discount with the bill if the restaurant does not have to provide a receipt.  No receipt, no record of an expenditure, no tax to pay.  And the discount is large enough to keep both the seller and the customer happy.  It is probably the most widespread open secret in China.  The size of the discount varies.  The place I liked to frequent only gave a 5% discount. 

As I was for several years able to expense my meals I always wanted the fapiao.

And here in America, I was seeing the same thing.  Pay in cash and receive a 10% discount.  I was surprised at this.  Why the 10%  The Chinese owner knows enough to keep both his customer happy and save money. Still, in America, I try and avoid Chinese restaurants.  No interest.  I get my fair share at home.  But my wife meets her friends at these places all the time.  And it turns out every single Chinese restaurant has the same policy.   Pay in cash(where in credit card happy America there is a paper trail), and everyone wins.  (The size of the discount defeats the reasoning of “just trying to cut down on credit card fees”.)

Ahhh…..but there is a catch:

This benefit is only for Chinese.   Laowai never get this deal.  Another smart thing to do.   As most Chinese themselves abhor paying taxes, it’s easier for them to swallow.  Like most Americans though, I get a bit annoyed when I see people illegally going out of their way to avoid paying taxes.  Everyone has to pay taxes.  We’re all in this together, right?  (Right?)   If what you do is legal, fair enough. Good for you.  But I see many people staying awake at night trying to nickel and dime the system, just the same.   

The idea expressed above is so foreign to the laowai,  and the energy needed to express repeatedly by the waitress to the laowai so time consuming, that’s its better just to give the discount to the Chinese.  They don’t need an explanation.  But it’s also true that if the discount was also given to the laowai there’s a good chance the place would be shut down within a month by the cops.

The USA is at times an overly gracious place to be.  Every cop knows that most of the waiters at a Chinese restaurant do not have legal residency.  And it’s no big deal.  However, if said cop knew these same people were all participating in a daily conspiracy to avoid paying taxes, than what?  Methinks Mr. Cop might have a problem with that.  Especially if he knew he wasn’t getting a chance at the discount.

The Chinese attitude in America towards paying taxes is in my view a bit overboard. 

Do you ever see a Chinese come tax time using an American accountant?  Of course not!  They know their accountant will not be interested in cutting corners here and there.

If the US government ever wanted to increase its tax collection it would be easy:  audit every single Chinese living in America and every single Chinese operated business.   

When we moved to this neighborhood several years ago, I found myself travelling all too frequently to Shenzhen.  It was tax time and I didn’t have time to find an accountant.  My wife instantly stepped into the gap, sensing an opportunity, and suggested we use a Chinese accountant.  I fought the suggestion.   

After all, taxes are a serious thing and I wanted to be able to speak more than pidgeon English to my accountant.  Alas, I ran out of time and my wife took care of taxes and called me while I was in China telling me I’m sure with a smile visible from 8000 miles away how much we would get back.  I couldn’t believe my ears.  On top of that, this tax accountant was really cheap.  A double bonus.  We’ve been using her ever since.

Then I got audited.

I won’t go into “why” I got audited. Suffice to say China Wife got greedy and let the $ in her eyes preclude her from asking all the right questions.  Oh yeah; China Accountant fucked up, too.
Would a professional accountant have made this error?  Of course not.  Would I have made this error?  Nope.   But when you put an overzealous China Wife who hates taxes and loves to vote Republican together with China Accountant you have a perfect storm for a $5000 fine.

My wife swings from left to right. In the beginning she could not understand why she had to pay taxes.  I had to explain to her the meaning of a Social Security Tax.  I had to explain to her why there is not just a Federal Tax but a State Tax.   It got taxing. (stupid pun intended)

“Everyone pays taxes, China Wife”.

“We pay too much, Wimpy Husband of Tiger Wife!”

Than my wife unloaded a profound insight.

“This country is very good to the poor and to the rich, but it steps on the Middle Class!”

Once she got her first tax return, her mood changed 180 degrees.

“What a strange country.   First they tax you too much, than they give it back.”

“China would never do this.  It just takes.”


  1. Hi sir. I want to start off by saying your experience and wisdom is a great help and I thank you. I wrote a comment in the article "the hidden cost of marrying a Chinese woman" if you can please help me out I would greatly appreciate it. Please and thank k you

  2. Great article. I work in a "china town" and am grateful when I see one chinese tax return that has any tax actually paid to the government.

  3. By coincidence I was in our "china town" yesterday. I put quotes around it because it's way the fuck in the extreme suburbs, some 20 miles from where I live. Yep...a Chinese accountant does our taxes. I had to wait quite a long time, as the lady in front of me(like everybody else) was spending overtime trying to figure out how to squeeze one more penny for themselves at the expense of Uncle Sam.

    I've always said the best way for the government to solve the budget deficit is simply by auditing every customer of every Chinese accountant...done!


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