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Chapter 145: Dunn Capital
🕑 Added 2025-05-04 19:40:56 +0000 UTCBack when I interned at an NGO in the U.S., it was funded by a bunch of rich folks’ charitable foundations. I don’t know how it works elsewhere, but I can tell you about a slick move American millionaires love to pull.
There’s this thing called a Charitable Lead Annuity Trust. Here’s the deal: a billionaire sets up a fund—say, $100 million. Every year, they donate a chunk—like $10 million—to charities for a set time, maybe 10 years. After that, whatever’s left in the fund gets handed off to someone else, tax-free.
You might think, “Wait, that’s dumb! $100 million, $10 million a year for 10 years—there’s nothing left, right?” Nope! Here’s the magic: they stick that $100 million into a foundation that invests it and grows it. Usually, the foundation’s returns blow past the annual interest and tax rates. Say they make 10% a year, and taxes are 5%. After 10 years, the heirs might end up with more than the original amount. Pretty sweet, huh?
Honestly, this setup’s got some solid perks:
1. In the U.S., hardly anyone pays estate taxes. I read somewhere that only folks with over $5 million in assets—less than 5% of the population—get hit with it. So, it’s really just for the mega-rich.
2. It pumps cash into charities and NGOs. Compared to some countries where NGOs scrape by, American ones live pretty cushy thanks to this. Over here, a lot of NGOs can’t attract talent or even keep the lights on because funding’s so tight. This system keeps them thriving.
Now, imagine if China rolled out that rumored 800,000-yuan estate tax threshold with no real charities or funds to dodge it. That’d be like dropping a mountain on the poor and their kids!
Oh, I found a great article for reference: “How Countries Tax Estates: Less Than 1% of U.S. Families Pay” - China News Network. Turns out, U.S. estate and gift taxes are one system. You don’t dodge taxes by giving stuff away early—there’s a $14K annual gift tax exemption per person, and a lifetime cap that tallies up everything you’ve handed out. Tax rates depend on how much you’ve given total, alive or dead. No shortcuts there! The only trick? Gift assets that’ll grow later to skip taxes on the gains.
Cash gifts could work, but if you get caught dodging taxes in the U.S., it’s a felony—jail time’s on the table. People don’t break laws here because they’re scared of getting nabbed; they avoid it because the fallout’s brutal. That’s why you hear “Don’t get caught!” in every crime show. Americans shell out big bucks to lawyers and tax pros for estate planning—legal loopholes, baby! Even drug dealers, undocumented folks, and sex workers file taxes. The IRS and ICE don’t swap notes, and there’s even anonymous tax stamps for dealers so they don’t pile tax evasion onto their rap sheets. Loads of crooks get nailed for tax dodging when their main crimes won’t stick—wild, right?
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Switching gears: China’s cooking up some big reforms—pensions, estate taxes, property taxes, even an “opt-out” organ donation rule. Experts call it “global alignment,” but the public’s not buying it. Dig into the drafts, and one thing’s clear: it’s all about fattening government coffers, zero care for what people can handle. The goal? Suck up folks’ limited cash through taxes.
Take estate tax as an example. The latest draft supposedly hit the State Council, and the proposed rates are sparking outrage. Supporters say it’s “global standard,” a Robin Hood move, claiming the U.S. and Japan are cranking up inheritance taxes. But they dodge the real question: are those countries raising or lowering them? Truth is, the U.S. slashed its base rate from 55% to 35% between 2001 and 2011, bumping the exemption from $675K to $5M. By 2013, it settled at $5.25M with a 40% rate. Japan’s 2003 tax reform cut rates, simplified brackets, and boosted refunds to smooth generational wealth shifts. Even some EU nations are dialing back high estate taxes because they tank livelihoods. Meanwhile, China’s draft hits spouses and heirs harder than most developed countries, skips double-tax relief, and ignores exemptions for small business assets—stuff that’s standard elsewhere. Researchers say it’s not the ultra-rich who’d pay, but the middle class, small biz owners, and hardworking savers.
This tax screams “rob the middle, feed the state.” Here’s why:
1. The threshold’s way too low—80万 (about $115K). Most middle-class families would owe. The tax table? 0% under 80万, then 20% (80万-200万), 30% (200万-500万), 40% (500万-1000万), and 50% over 1000万, with deductions of 5万, 25万, 75万, and 175万. That 80万 starting point’s a joke—housing prices have ballooned, inflating family net worth. A report claimed China’s household assets hit $69.1 trillion vs. the U.S.’s $57.1 trillion, 21% higher. Absurd, but it’s the real estate bubble. Homes make up 70%+ of urban Chinese wealth. In Shanghai, folks brag about “millions” in assets—mostly their house.青岛? A 100m² apartment’s over a million, turning everyone into “millionaires.” At 80万, anyone with a house pays when their kids inherit. Below 300万, it’s a crushing burden—some might lose their homes if they can’t cough up.
2. The ultra-rich? They’ve got workarounds. Fair taxation needs full visibility—marriage, real estate, stocks, offshore assets, immigration status. China’s government doesn’t have that on the super-wealthy (or want it—plenty of officials are secret billionaires). The elite set up offshore trusts, shift wealth to tax havens, or park properties under their kids’ names abroad. That’s how you get 20-something Chinese billionaires. Red aristocracy with foreign passports? Taxes don’t touch ‘em. This draft screws the middle and small-fry rich, not the top dogs.
What’s missing from the brain trust behind this? Conscience and accountability. They’re fixated on the government’s cash cravings, funded by fat state grants to dream up ways to fleece the public. People’s breaking points? Not their problem. Beijing Normal University eggheads promised a tax bonanza: “In modern economies, estate taxes are 1-2% of total revenue. At 2%, China’s 2012 $1.5T tax haul could gain $30B.” Can the middle class handle it? Who cares! Same vibe as the Tsinghua profs pushing later pension ages, ignoring how retirees survive ‘til 65.
Folks see through it. A Weibo post nailed it: “A couple scrimps, squeezes their parents’ savings, takes a 30-year loan for a house. Thirty years later, it’s paid off. Thirty more, they pass, kid inherits—a few million in value, but $100K+ in estate tax. Kid works 8 years to pay it, gets the house… then 2 years later, the 70-year property lease expires.” Brutal.
China’s tax burden’s second-highest globally. No taxpayer rights, no budget transparency, and asking for officials’ wealth gets you locked up. Land grabs rob the poor; this tax guts the middle. It’s a “feed the Party, starve the people” racket—and it’ll only kill public trust.
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In the U.S., estate tax is steep—around 45%, plus 15-35% capital gains tax. Take $100M: pass it to your kid, and after taxes, it’s $37M. Invest that at 10% yearly, pay 30% tax on gains—30 years later, it’s $2.8B. Donate it to a charity foundation instead? No estate, capital gains, or annual gains tax. Law says foundations donate 5% yearly. At 10% returns, that $100M grows to $4.3B in 30 years, with $3.3B given away. Gates Foundation goes beyond that 5%—pretty generous! Bill Gates balances genius and giving, outshining Jobs’ flash. Decades from now, Jobs’ legacy might fade, but Gates’ foundation will keep rolling, like Ford’s or Rockefeller’s.
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Here’s a U.S. rumor debunk: “Estate tax hits in 2016, Shenzhen’s piloting it!” Nope—old fake news. Shenzhen’s tax office squashed it back in 2015: “Total bunk, don’t spread it!” People ask, “Even if it’s fake now, didn’t the government flip-flop on pensions and retirement age? Why not estate tax?” Look, rumors are rumors. The tax bureau’s got zero plans for it—no Shenzhen pilot, nada. Bash the government for real stuff—plenty to pick from—don’t waste time on fiction. China’s been cutting taxes since 2013: small biz under 30K monthly sales pays zilch, corporate tax breaks are growing, and the PM’s pushing depreciation write-offs. Estate tax doesn’t fit that vibe—I’d bet no levy soon. If it ever happens, 80万 at 20-50%? Insane. Even personal income tax tops out at 45%—50% estate tax would spark riots. The government’s wooing startups and investors, not torching stability.
New taxes are a beast—complex, costly, and locked in since ‘94. Post-2012, tax laws tightened up; starting a new levy’s a slog. Stability trumps all—estate tax would wait for personal income reform, which is years off. France’s high-tax mess is a warning they won’t ignore.
U.S. estate tax? A century old, $650K threshold, 55% max—House voted to nix it this year, but Senate’s not biting. Their system leans direct taxes; China’s indirect. No copy-paste here.
Personally, I’m against estate tax here. The government’s not dumb enough for that crazy draft—it’d backfire on them too. Don’t buy the hype.
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I dug up the rumor’s root: a 2012 Shenzhen income reform idea. One line mused, “If the state wants a pilot, we’re game.” No plan, no backing—just a local brainstorm that got debunked. Tax bureau’s not under the United Front’s thumb either. Real estate tax would need a tax overhaul first, and that’s dormant. Insurers hyped this to sell policies—classic grift.
Estate tax is a rotten idea, legally and morally. Private property’s sacred—you get to decide what happens to your stuff. Taxing it heavy just ‘cause it’s a lot? That’s civilized society’s floor cracking. Buffett and Gates think hoarding wealth for kids is a disaster—cool, their call. Doesn’t mean everyone should. It’s like jailing folks for premarital sex ‘cause some celeb says it’s wrong—nuts!
Pro-tax folks say: 1) Rich kids can’t handle the cash, it’s wasted. But economics proves governments suck at allocation worse than businesses. Wang Sicong might not match his dad, but would taxing Wanda’s billions build jobs? Malls are landmarks; government plazas are vanity projects. Capital flows to profit—say a dumb heir parks $1B in a bank at 3%. The bank lends at 6% to a firm earning 20%. That’s not waste—it’s working! Even “squandering” on luxury boosts jobs—think a $30K Hermès bag: maker, shop, staff all get paid, profits reinvest, employment grows.
2) It curbs inequality. Sure, rich kids start higher, but if they’re flops, wealth fades. Talented poor rise. Why kill the rich off for that?
Tax fans often don’t get wealth—it’s not just digits. For the rich, it’s fluid: stocks, loans, risky bets. A $18 stock jumps to $100 post-death—tax it? A $100 stock crashes to $10—skip it? A developer’s $1B building tanks to $300M with $800M debt—tax what? Future gains muddy it more. Rich folks dodge with trusts and tricks—good luck taxing ‘em.
If estate taxes have to exist, I’d say it’s fine to slap a notary fee on estates with no named heirs. Here’s the logic: private property’s untouchable, right? But when someone dies, their grip on it fades. If they didn’t pick a beneficiary, the law steps in to divvy it up—think of it as a forced hand-off. The state’s gotta manage that, so a small fee makes sense. Beyond that, though? Any estate tax is straight-up rotten.
Just the other day, “Fae” CEO Mark Zuckerberg dropped a bombshell—he’s donating 99% of his shares, about $45 billion! Ten years back, a young hotshot billionaire like him would’ve earmarked that for his daughter. But this April, the U.S. House voted 240-179 to ditch the estate tax. So why’s Zuck still going the charity route?
China’s been all, “Let’s copy the U.S., get that fancy estate tax going!”—and then boom, America scraps it first. Buffett’s probably leaping out of his hospital bed like, “Finally, no more sneaky workarounds to pass stuff to my son!”
The U.S. built itself on capitalism—smart folks get filthy rich, no cap. But to keep them from turning into mini-kingdoms, they’ve thrown up some guardrails. Back in Roosevelt’s day, the rich got locked down tight. Reagan started prying those chains off, Bush Sr. pushed it further, and by Junior’s time, he was ready to smash the estate tax entirely. Took office and swung for it—only to watch it stall for eight years. Why? Bill Gates’ dad, Warren Buffett, George Soros, Disney’s heiress, and 120 other mega-rich folks sent Congress a petition, took out ads screaming, “Please tax us!!” Wild, right?
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