Chapter 13 3. The "high tax" nightmare of financial talents

By 2020, that is, 10 years later, Shanghai plans to become an international financial center as famous as New York. Naturally, this goal must be achieved by people and talents.Compared with other international financial centers, there are 770,000 financial practitioners in New York, including 400,000 on Wall Street, and 300,000 financial practitioners in the City of London alone.However, there are only 200,000 employees in financial institutions in Shanghai, and there is a huge shortage of financial talents. How to fill this big hole as soon as possible?The quickest way Shanghai can think of is to set up a financial talent award and give money to financial executives.But at the beginning, this money was taken out of the pockets of financial talents in the form of taxes, but now it is stuffed back in the name of rewards, and I hope that the talents will be deeply moved by Shanghai's "borrowing flowers to offer Buddha", As a result, he willingly came to work for you.This is the wishful thinking that Shanghai has in mind for 2020.

"Compared with other international financial centers, the biggest gap between Shanghai may be the high taxation." When asked about the "shortcomings" of Shanghai's construction of an international financial center, Li Jing, managing director of JPMorgan Chase, answered without hesitation. According to China's current tax system, the personal income tax threshold is 2,000 yuan, divided into nine levels, the lowest level of tax rate is 5%, each level increases by 5%, and the highest level is 45%.Almost all financial executives with incomes of millions are eligible for the highest tax rate.

"According to the current tax law, 40% of our executives' income has to be paid for taxes." An executive of a bank registered in Shanghai said. Randstad, one of the largest human resources service companies in the world, pointed out in the "International Financial Center Talent Attraction Index" released on April 8, 2010 that although the government supports international financial talents to work in China, Shanghai is still in the It may lag behind other international financial centers in terms of taxation, welfare, living, medical care, education and other soft environments.

According to the Randstad International Financial Center Tax Environment Index, Hong Kong ranks first, followed by New York, Shanghai ranks third, and London ranks second. According to its survey, the threshold and tax rate structure have the greatest impact on middle and high income earners.There are 4 levels of tax rates in Hong Kong, the highest level is 17%, and the average tax burden of middle- and high-income earners is only 15%; the US tax rate has 5 levels, the highest level is 35%, and the average tax burden for middle- and high-income groups is less than 30%; There are 9 levels in mainland China, the highest level is 45%. For those with an annual salary of over one million, the average tax burden is about 40%.

According to Zhang Baoling, director of China business development of KCS Kaiyu Management Consulting Co., Ltd., even foreigners have to pay taxes according to Chinese standards as long as they work in China for more than 183 days. "Although the mainland currently provides five tax deduction benefits for foreigners, including housing and education, compared with Hong Kong and other cities, the tax burden in the mainland is indeed much heavier." Zhang Baoling said. Phoenix Satellite TV once aired the column "Decoding Chen Wenqian" on August 4, 2009, with the title "Two Cities Competing for Beauty, Shanghai and Hong Kong Compete as Financial Centers after the Financial Tsunami" to discuss the future of Shanghai and Hong Kong in the next ten years. Strategic development pattern, and believes that "Shanghai's repositioning, to a certain extent, is the most threatening and most competitive Hong Kong."

"Hong Kong's biggest advantages are the rule of law, talents, financial supervision as a leader in Asia, and free currency exchange. Shanghai will not be able to catch up in the short term." Executives from HSBC, Royal Bank of Scotland and Thomson Reuters have relocated to Hong Kong, while JP Morgan announced in March 2010 that it had sent a Its top private banker to capitalize on growth opportunities in Asia. Hong Kong has rising wealth, residents have a stronger propensity to invest and has been able to bounce back quickly from the global economic downturn compared with other western regions, they say.But behind all this serious reasoning lies another allure: Hong Kong also has the highest take-home pay for workers in Asia, according to management consultancy Hay Group.

That's right, income!It is also a fast-growing financial center. Since Hong Kong pays equal labor and gets much more rewards than Shanghai, why choose the lovely Pearl of the Orient? The Hay Group has completed its annual ranking of the countries with the highest disposable income for executives, which takes into account wages, other forms of compensation such as housing allowances and insurance, as well as local cost of living and taxes (even fringe benefits indicators, Such as the type and make of car the employee gets). Hay Group's PayNet analysts gathered the data using standard methodology measuring job scope, pay and benefits across 56 countries.

According to Hay Group's latest Global Management Pay Report, Hong Kong is followed by Thailand, Singapore, South Korea and Australia as the Asian region with the highest employee purchasing power.Mainland China ranks eighth. In Asia, Hong Kong topped the list.Although the city known as the "Pearl of the Orient" is conservatively controversial for its high housing prices, housing is often included in salary packages, so Hong Kong managers often have 40% more spending power than their American counterparts. William Lo, director of the Hong Kong office of Hay Group, said: "Hong Kong is a financial center and has to attract a lot of talents, so wages are quite high. Because taxes are also low, so spending power is high. This is why many Western countries lag behind. Hong Kong’s reason. Taxation is definitely the number one reason why Hong Kong and other regions are at the top of the list.”

In places such as China and Southeast Asia where the "talent war" is still fierce, it is very important to compare salary options. "The development trend of these places is the emerging markets of the third world, where there is a shortage of senior management talents, and high salaries must be used to attract talents," said Nidthia Chelvam, general manager of salary information services at Hay Group. Obviously, taxation is still an important weight to attract talent flow.Therefore, in order to become one of the international financial centers, the Shanghai Municipal Government issued the "Several Regulations of Shanghai on Gathering Financial Resources, Strengthening Financial Services, and Promoting the Development of the Financial Industry" in 2009.It is mentioned that in accordance with the requirements of building a team of financial talents with international competitiveness, the municipal government will reward financial talents who have made significant contributions to the construction of Shanghai's international financial center.

An official from the Shanghai Municipal Finance Office said that the current personal income tax in Hong Kong is 15%, and the highest level in Shanghai has reached 45%. Therefore, Shanghai hopes to reduce the personal income tax by about 25%.However, because it is difficult for local governments to change their tax policies, they return them by setting up financial talent awards. Fang Xinghai, director of the Shanghai Financial Services Office, said frankly: "For the financial industry in the Mainland, we feel that the tax burden on these financial talents may be too heavy. Therefore, Shanghai will further reduce the tax burden in this area in the future. We hope to be able to Attract more talents to work in Shanghai."

The wish is good and the direction is right.It's just that in order to really implement it and make big moves in finance and taxation, in addition to institutional factors, there are also many detailed problems. “If the final plan is: Shanghai decides to subsidize the tax portion of these financial executives that exceeds the international level; then will the State Administration of Taxation tax the subsidized portion again?” said Hu Yijian, a professor at the School of Public Administration of Shanghai University of Finance and Economics. In the past, some district-level governments in Shanghai implemented financial incentives for individual financial companies to make up for the impact of high taxes in order to attract investment. Zhu Ning, marketing director of Randstad, revealed that a state-owned financial company once applied to the government to return part of the personal income tax to executives in the form of financial incentives. The validity period of this preferential treatment is two years. "But in fact, most of the applications for preferential treatment are local policies for attracting investment. Most of them are discussed on a case-by-case basis, and the policies are not transparent or public." Zhu Ning said. There are still many problems to be solved in upgrading the "soil" policy of the district-level government to a comprehensive policy of the financial center.Although the Financial Talent Award has been proposed for a long time, the specific implementation rules have not yet been announced for which institutions and which levels of executives the Financial Talent Award is aimed at. "We haven't received similar information, and we don't know whether it will be implemented for our local financial institutions in Shanghai." A Shanghai bank executive said that it is expected that the implementation of the policy will still be difficult. Obviously, it is the key task for Shanghai to build an international financial capital whether it can really repel the "high tax" nightmare of financial talents who have already settled in or plan to serve Shanghai, and attract more talents to Shanghai, but there is still a long way to go. At present, "burden reduction" only stays on lip service. High taxes have the biggest impact on financial executives, and they are also the most concerned issue, but among the 200,000 financial talents in Shanghai, small white-collar workers are the main force.The "trifles" between them and the city are also related to the realization of Shanghai's great 2020 goals, isn't it?In addition to the high tax burden, the expensive cost of living in the city actually affects them more. In the second quarter of 2010, China's GDP surpassed that of Japan and became the second largest economy in the world, but China's per capita GDP was only 1/10 of Japan's per capita GDP, only 3,800 US dollars, ranking around 105th in the world.According to the poverty line of 1,300 yuan for Chinese people, there are still more than 40 million people in the country who have not escaped poverty. The "Financial City" of Shanghai, the small Lujiazui area, gathers more than 500 financial institutions and more than 100,000 financial practitioners.Financial people living in this "financial city" also face a huge "gap between rich and poor". In 2009, "Jiefang Daily" conducted a survey of 150 practitioners in the Financial City.It was found that the monthly income of financial practitioners in Lujiazui ranged from less than 3,000 yuan to more than 50,000 yuan, with a big difference between the upper limit and the lower limit. The income level was concentrated between 10,000 and 30,000 yuan, accounting for about 41.2%.According to the 2009 Shanghai Statistical Yearbook, the average monthly salary of employees in Shanghai in 2008 was 3,292 yuan, and the average monthly salary of employees in the tertiary industry was 3,849 yuan.More than 70% of financial practitioners have income levels higher than the city's average. However, despite the high salaries, the mobility of personnel in the financial industry is obvious.Among the respondents, 68.2% have worked for more than 5 years, and the number of people who have worked in financial related industries for more than 5 years has just reached 50%.This also means that a considerable number of practitioners "change careers" from other industries, which also shows that the entry point of the financial industry is relatively high and requires considerable work experience. In the survey, people born after 70s accounted for 95.9%, and the post-70s and post-80s accounted for almost half of the total. The post-80s generation has become the mainstay in the financial industry.Among those who are currently engaged in the financial industry, most of them have bachelor's and master's degrees, accounting for 54.3% and 39.2% respectively. The proportion of doctoral degrees in the financial industry is not high, only 0.7%.From the analysis point of view, the higher the academic qualifications of most financial practitioners, the higher the positions they hold.Masters account for a relatively high proportion of middle-level leadership positions, and the post-70s are currently the main force in middle-level positions in banks. Lujiazui Financial City gathers the largest number of financial white-collar workers in Shanghai. Most of them work for well-known financial companies. Wearing crisp fabrics and well-crafted clothes, they shuttle among the most concentrated high-rise buildings in the city. Envious group.But for them, Shanghai's "expensive" is still a problem. Indeed, in the "Liberation Daily" survey, only 6.8% of respondents voted in favor of Lujiazui's satisfaction.And more people think that there are shortcomings and need to be changed.What are financial white-collar workers most dissatisfied with?The preferred answer is transportation, with 56.1% of the people dissatisfied with the traffic in Lujiazui. Every day, Lujiazui Financial City wakes up early. At around 7:00 in the morning, financial white-collar workers living in all directions of the city began to gather here to start a day of life in Lujiazui.The number one rule in the City is to be on time.Therefore, every working day of financial white-collar workers, they have to "catch up early". Zhang Xinghua, who works for a fund company in Lujiazui, has two "unique" points.First, he insists on having breakfast at home and is "self-sufficient". In order to arrive at the office before 8:30, he often needs to get up earlier as he lives in Puxi; second, he chooses to travel by "bus + ferry", which he thinks can Avoid uncertain congestion and ensure "on time and on time".The above is also to save money. Life in the "Financial City" of Lujiazui cannot escape the pressure.Among the 8 stress-generating factors surveyed by the "Jiefang Daily", the time-consuming and labor-intensive factor of commuting to and from get off work was selected 82 times, accounting for 22.2% of all the factors that appeared, and 56.6% of the employees engaged in financial work in Lujiazui were due to This factor felt pressure; high cost of living was selected 81 times, accounting for 21.9% of all the factors that appeared, and 55.9% of the employees engaged in financial work in Lujiazui considered this factor. Among the many sources of stress and annoyance, the stress of housing cannot be ignored. The survey found that housing expenses accounted for a relatively high proportion of income, which brought pressure to most financial white-collar workers in Lujiazui.Among the respondents, 35% of the people’s housing expenditure accounted for less than 10% of their income; 35.8% of them had their housing expenditure as a percentage of their income between 10% and 30%, and 23.6% of their housing expenditure accounted for 30% of their income. %-50%, 5.4% of people spend more than 50% of their income on housing. Along with the increase in income, the financial industry practitioners have correspondingly increased requirements for housing quality. Therefore, although the income level in Lujiazui area is generally not low, the high housing prices in Shanghai make them feel the pressure of housing.