Why China Grows Faster Than The US

One continues to hear a lot of China bashing. They compete "unfairly". American companies are "shipping jobs" to China. What you seldom hear is a discussion of the comparative economic incentives in China versus the US. The fact is, government in China has created a much more friendly place to work and produce than in the US. The US heavily taxes economic success. China does not. Wonder why Chinese businessmen no longer come to the US to set up their businesses? Look at the table below.


                                                              China                                                      United States

Capital Gains Taxes                                  0                                                            20-45%

Property Taxes                                          0                                                         Substantial

State and Local Taxes                               0                                                             10-20%

Top Federal Income Tax Rate                 35%                                                           43%

Corporate Tax Rate                                 15%                                                           39%

Inheritance Tax                                         0                                                               55%




Also consider that this China is not the casino economy the US is where everyone is playing with borrowed money.


Min. Home Loan Down Payment            30%                                                             3%

% Vehicles Purchased on Credit               7%                                                           >50%

Now, you might still rather live in the US for non-economic reasons. China  has a one-party government that can punish people it doesn't like (of course, as we have seen, the IRS behaves that way in the US). But what China has done is create the sort of economic climate that used to exist in the US. One where people were strongly incented to produce. One where people could keep most of what they produced instead of handing it over to government. The result is clear:

GDP Growth Rate                                   10%                                                             2%