Today is April 14, the day before April 15, the infamous date when the IRS requests all American citizens to submit their tax returns. This will be my first Tax Day in the US since 2003, and it got me thinking about paying my taxes in China. This is actually a question I get quite often from American friends. How did I pay my taxes in China? The funny thing is that I really have no idea how or if I paid my taxes in China at all (excluding projects for which I was paid for in USD).
I spent my first two years in China teaching at Chinese universities, and my salary was always in Chinese currency…and when I say “in” Chinese currency, I literally mean in Chinese currency. On the first day of every month, one of the teachers from my school would knock on my door, and hand me a folded wad of 45 one hundred RMB notes (approximately $540 at that time). There was no pay stub, no deductions, not even a little red envelope for my bills.
Typically, getting paid in cash would not be a bad thing, but I wasn’t exactly stoked about having to ride my bike to the bank once a month with that kind of cash on my person. Furthermore, I always wondered if there were any taxes I would ever be expected to pay. I asked the school administration about this several times and was never given a clear answer.
After going through this same overly simplistic process in my second university job, I came to the conclusion that my taxes were probably taken out before my income was figured. Thus, a job which had a salary of 4500 RMB per month in China, actually paid 4500 RMB, whereas in the US, a salary quote is always before taxes. Furthermore, at the end of the year there was no filing I was required to turn into the Chinese tax bureau.
This tax situation, or lack of tax situation I should say, is not just limited to foreign experts or English teachers. When I worked at the barbershop, the practice was the identical. Every month, the employees would receive their earnings, in cash, without any forms listing withholdings, and without filing tax returns at the end of the year. (It would be interesting to hear how, or if this situation is different for those whose positions are higher up on the economic totem pole than those of an English teacher or a hair washer.)
Now that I am back in the US, I am back to going through the same procedures we all do in April to ensure that Uncle Sam is getting his fair dime me. I have returned to the land of pay stubs, deductions, and 1099′s, and I can’t help but feel distant from the world where you get paid in a wad of bills, taxes are an afterthought, and there are no year-end returns to file. Sometimes it’s just the little things you miss about a living in the Middle Kingdom, like not paying your taxes.