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    VOICES & OPINION

    China’s Outdated Tax Laws Are Leaving Writers Out of Pocket

    A decades-old relic of the planned economy stands in the way of a fair and progressive income tax system.

    In China, an outdated tax policy means that if a freelance writer is paid more than 800 yuan ($127) for an article, that payment is automatically taxed at a rate of between 14 and 20 percent.

    In 1980, when the government set the minimum tax threshold for income earned from freelance writing, they chose to make it the same for salaried work: 800 yuan per month. Back then, the average urban worker made about 40 yuan a month. Almost all freelancers had regular salaried jobs and saw writing as just a way to bring in a little extra cash. Such a tax structure was therefore well-suited to the social and economic conditions of the time.

    But wages have risen rapidly in the nearly four decades since then. At the same time, the minimum income tax threshold has been raised multiple times and currently stands at 3,500 yuan per month. Salaries above that level are subject to a progressive tax system: The first 1,500 yuan above the threshold is taxed at 3 percent; the next 3,000 yuan is taxed at 10 percent; and so on all the way up to the 45 percent tax rate paid by those who make more than 80,000 yuan per month. There are seven different tax brackets in this system.

    For freelance writers like me, this system is clearly unfair. Writing is a mentally strenuous endeavor, but in China, the state takes a hefty cut every time I earn more than 800 yuan, while barely scraping a few pennies from those who earn more than 3,500 yuan.

    In the 1990s, as the economy grew and jobs became more specialized, a new generation of independent authors and freelance writers emerged in China. The last few years have also seen the rise of digital media platforms fueled by armies of so-called content creators. There is more demand for freelance writers than ever before, yet writers themselves continue to be taxed punitively for their work.

    At this year’s Two Sessions political meetings, Pan Xiangli, a deputy in the National People’s Congress and distinguished chief editor of the Shanghai-based newspaper Wenhui Daily, stated: “Author payments are too low and copyright royalties are not particularly reasonable.” She went on to suggest that such freelance income be exempt from tax.

    Pan’s proposal is radical, but it isn’t fit for purpose either. In today’s China, many people earn money by writing for one or more of the country’s various public platforms. This includes everyone from traditional fiction writers and their online counterparts to legions of commentators, screenwriters, and translators. They are all paid markedly different sums for the jobs they do, and Pan’s sweeping tax exemptions would be unsuitable for the industry’s higher earners.

    In April last year, the Chengdu-based newspaper West China City Daily published lists ranking China’s wealthiest and most powerful writers. On the list of internet writers, defined as those who create original literature for online publication, the fantasy writer Zhang Wei — who normally writes under his pen name, Tang Jia San Shao — ranked first with an income of 122 million yuan. Zhou Meisen, who wrote the popular anti-corruption TV series “In the Name of the People,” was the highest-earning screenwriter with 14 million yuan.

    Presumably Pan was not talking about such commercially successful writers when she decried the industry’s low payments. Zhang and Zhou stand comfortably among China’s wealthiest citizens and it is only fair that they pay tax on the vast amounts of money they earn from their work.

    But a broader look shows writer incomes remain low overall. In 2014, the National Copyright Administration and the National Development and Reform Commission jointly released rules determining remuneration for the use of written works. These rules stipulate payments ranging from 80 and 300 yuan for every 1,000 Chinese characters of original content. Based on personal experience, writers are typically paid somewhere between 100 and 500 yuan per 1,000 characters for a piece published through a mainstream media outlet. While this usually exceeds the maximum amount specified in the regulations, it still makes it hard for professionals to support a family on writing alone.

    Alongside this system, the growth of online media has led to the emergence of a click-based fee system, in which writers are paid a base fee and may earn additional income according to the number of people who click on their work. The larger the audience, the more money they make: A particularly popular article might bring in up to 10,000 yuan, for example. In order to ensure a steady stream of high-quality content, certain online outlets offer authors a deal: As long as they produce a certain number of original articles a month — usually around 15 pieces — they will be guaranteed a minimum income and are eligible for further payment if an article has a particularly high readership. Other authors have even been able to secure a share of advertising revenues.

    The coexistence of various payment systems for freelance writing means that while some authors are still paid according to an obsolete remnant of China’s former planned economy, others get cash according to the perceived quality of their work, and still others make a living via more deeply marketized means like readership figures or commercial revenue shares. As a result, Pan’s statement that writing fees should be exempt from taxation is a one-size-fits-all approach that fails to account for the complexity of the current industry landscape.

    China’s tax system is in need of reform. At a Two Sessions press conference, Shi Yaobin, a vice minister at the Ministry of Finance, stated that the government planned to roll salary income and other forms of remuneration — including freelance writing fees — into a single category and use the combined total as a basis of new income tax thresholds.

    Here, China can learn from the experiences of other countries. In the United States, the highest marginal tax rate is 37 percent for those with annual incomes of more than $500,001. The United Kingdom has a similar system, with individual tax rates ranging from 20 to 45 percent in England, Wales, and Northern Ireland.

    It’s time to bring Chinese writers’ fees in line with international trends. Let’s combine regular salaries with all additional incomes earned from writing and use the total amount to calculate individual income taxes, with any expenses incurred during the creative process eligible for deduction. This will not only reduce the tax burden on our country’s writers, but also stimulate the young and underpaid to view writing as a creative and valuable endeavor.

    Translator: Kilian O’Donnell; editors: Zhang Bo and Matthew Walsh.

    (Header image: Wu Huiyuan/Sixth Tone)