Late Yuan Dynasty: I am the true emperor

Chapter 396 Why not implement the tax-sharing system?

Today's class was really an eye-opener for everyone. The three-part theory of the Yellow River and the corresponding management methods, water conservation in the upper reaches, soil conservation and sand fixation in the middle reaches, and clear water storage and yellow water flushing in the lower reaches, such a clear and definite river management theory can be said to be a summary.

But at the same time, everyone felt that what Lu Jin said, that the people in several provinces along the middle reaches of the river were prohibited from cutting down trees, was a little unbelievable. Fortunately, their commander-in-chief was not stupid enough to impose a direct ban.

At this time, Lu Jin said.

“If we want to protect soil and fix sand, we must ban logging, but if we want to ban logging, we must first solve the production and living needs of the people.

"The first is fuel. I just said that the people of Bianjing in the former Song Dynasty burned more coal and less firewood. If that's the case, why not promote coal and ban the burning of firewood? Shaanxi, Gansu, Shanxi, Henan, and Hebei all have rich coal mines, so why doesn't the court encourage the coal industry in the corresponding regions?

"Not only should we encourage coal mining and formulate relevant policies, but we should also build roads after the coal is mined so that the coal can be transported to thousands of households. Does the transportation industry also need support from the court?
"Solving the firewood problem is only the first step. There are also housing and furniture issues to be solved. Since wood is not allowed to be used in building houses, the court must encourage the construction of brick and tile houses, especially cheap red bricks and coal slag bricks. This way, the coal ash left over from burning coal will have a place to go. So, should the brick-making and construction industries also need support from the court?
"So, bricks and tiles are not enough. Doors, windows and furniture will still need wood. How can we meet these needs?"

At this time, Chen Yu had already understood Lu Jin's idea, which was to solve the production and living needs of the people by guiding merchants to invest in related industries through the court, and then order a ban on logging to cooperate with the court's river management plan, so he immediately took over.

"I think we can encourage merchants to ship timber from provinces that have abundant timber but are not along the Yellow River. For example, Luzhou is close to the Dabie Mountains but far from the Yellow River. We can collect timber from the mountains to supply Henan. Hanzhong has abundant timber in the Qinling Mountains but is also far from the Yellow River. We can collect timber from the mountains to supply Shaanxi and Gansu. Shanxi can collect timber from the Taihang Mountains nearby.

"And even for riverside provinces like Shanxi, Shaanxi and Henan, there is no need to make a one-size-fits-all decision. The court can designate some mountains and forests in each province, which ones need to be protected and which ones can be cut down, but new trees must be planted after cutting down. This can also solve some local timber needs."

"Not bad." Lu Jin praised immediately, "It seems that you have already understood how to use the means of regulating industries to assist in handling national affairs.

"As long as the imperial court can continue to promote the four industries of coal mining, brick burning, tree planting and timber export in the middle reaches of the Yellow River, and then issue a decree to prohibit logging, and continue to govern the country in the same way for decades, there is no need to wait for a saint to be born. The Yellow River will no longer have silt flowing into it, and all that will come down from the upper reaches will be clear water. In addition, the lower reaches will store clear water and flush the yellow water. The Yellow River will naturally become clearer and clearer. The lower reaches will no longer be blocked by silt, and the river channel will be unobstructed. The Yellow River will no longer change its course at will, and the floods in the lower reaches will be much less.

"This is the role of industrial regulation in managing the Yellow River."

Everyone hurriedly wrote down the key points of what Lu Jin said, and then Lu Jin went on to talk about how to regulate the economy, guide industries, and what later generations often called the three engines of economic growth, namely investment, consumption, and foreign trade, among which investment had the quickest effect.

You invest in a factory, recruit workers and organize production. The factory owner sells products and the workers earn wages. The factory owner can continue to expand the factory and the workers can use the money to consume. Therefore, investment is a long-term booster of economic growth. Although consumption and foreign trade can promote economic growth in the short term, in the long run, their effects are not as long-lasting as those brought by investment.

At this time, Tao An raised another question, "My Lord, investment growth is indeed the longest-lasting, but among the three major drivers, investment also requires the most capital, right? So how should the court guide merchants to invest? If merchants are unwilling to do it, the court can't invest money, right?"

Lu Jin asked, "Why not? In fact, we have already done it. Isn't the ironworks in Luzhou a government-run company? Although it is producing armor and weapons now, when there are enough armor and weapons in the future, the ironworks can't just be closed down. It must switch to producing civilian ironware. And the government-run Salt Company, isn't it also a state-owned company?

"For future industrial guidance, we must first make it clear that some industries related to military and political affairs and people's livelihood must not be handed over to private merchants, because private merchants are profit-seeking. Once they are allowed to participate in these industries, it will lead to instability in the country and the people's livelihood, such as salt, precious metal minerals, gunpowder manufacturing, gun and artillery processing, etc.

"There are also some industries that merchants have not yet set foot in. The court can first invest on its own, and when the industry is stable and profitable, it can allow private merchants to buy (contract) or the court can openly bid."

"What does bidding mean?" Wang Guangyang asked with a frown.

"Tendering means that the court sets a bid document. For example, if the court wants to open a company in a certain place, let's say it is used to produce lighting fixtures, it requires an area of ​​land, a number of factory buildings, what technology and equipment to use, how much capital to have, how many workers to recruit, how many jobs to provide, and then it sets this matter as a bid document and makes it public to attract merchants to come and invest and set up factories.

"Merchants need to compete to obtain bids and see who has more advantages, such as which merchant has a wider sales channel and can sell the products directly after production, who has more sufficient funds, who has experience in related industries, etc. The government will choose one of them and let them win the bid. This method is called bidding, competitive bidding, and winning the bid."

Everyone looked at each other in bewilderment. This method of attracting investment through bidding was unheard of. They didn't expect that their commander-in-chief had so many creative ideas even in business.

What Lu Jin was thinking about was how to pave the way for industrialization and make officials all over the world pay attention to opening companies. You expect a group of Confucian scholars to attract investment? Stop talking nonsense. It's not that Lu Jin looks down on them. Given the Confucian ideology and attitude towards merchants, it would be strange if they were willing to take the initiative to attract investment unless they could see benefits!
What Lu Jin needs to do now is to pave the way for the system and guide officials to take the initiative to attract investment and set up more companies. The specific way to do it is actually very simple, which is to guide them with local taxes.

This is actually the reason why Lu Jin did not directly implement the tax distribution based on the amount of land when he formulated the nine-level tax tier.

First of all, you have to understand that the tax distribution according to the land area is a task that does not make much money, is thankless, and offends people. As for why the tax distribution according to the land area was exaggerated as if it were so awesome in later generations, we can only ask the truth.

The literal meaning of "sharing the poll tax on land" is to spread the poll tax on top of the land tax. If we were to do this now, assuming that after the unification of the country, there would be a total population of 6000 million, and we would divide it into half men and half women. Only men would be subject to the poll tax, then the poll tax of these million people would be spread evenly over the national land and grain tax, and in the future it would be paid together with the grain tax, and the poll tax would not be collected separately.

But when the population increases to 100 million or 200 million, will the extra 100 million people no longer need to pay the head tax? Wouldn't that be a loss to the court?
On the positive side, this policy indirectly abolished the head tax, which greatly liberated the population, and people dared to have children, and the population began to grow rapidly. On the negative side, the court could have collected an additional 100 million people in head tax, but now it has been overdrawn in advance, and no matter how much the population grows in the future, this tax cannot be collected.

So, didn't Yongzheng know the consequences of doing so? Didn't he know that implementing the tax-sharing policy would sacrifice future tax growth? Then why did he insist on doing so?
To understand this, you must first understand the purpose of Yongzheng's policy of allocating land tax to each household.

Normally, all taxes are divided into two parts, one part is turned over to the central government, and the other part is retained by local governments. The central government has its own things to do, and local governments have their own things to do. How can you do anything without money?

According to ancient practice, the land tax (grain tax) was to be paid directly to the central government, while the poll tax and corvée tax were to be retained by the local governments. The purpose of Yongzheng's policy of allocating taxes to the land was obvious: the central government did not have enough money, so it took the local taxes away and left nothing for the local governments.
So this tax distribution is nonsense. If you don't keep a single cent from the local governments, how can they do anything? Is this possible? Of course not!
Since you have taken away all the local head taxes, the local government will naturally have to find a way out for themselves, so they set their sights on "fire consumption".

For example, the land tax (grain tax) was 15% of the harvest, and the head tax and corvee together were 5%. In the past, this 15% belonged to the central government, and 5% was left for local development.

Now Yongzheng had taken all this 20%, but the local governments had no money and could not maintain it, so they could only start with the fire consumption and pass on the loss of this part of local taxes to the people, causing the people to increase their tax rate by 20% or even more than 5% on the basis of the original 10%, bringing the total tax rate for the people to about 30%.

The policy of allocating taxes based on land sounds good, but to be frank it is just a numbers game. The people's taxes have not been reduced at all, but have become heavier instead, which makes some people promote it as if it is some great benevolent policy.

Yes, that's right. The head tax will indeed limit the population growth rate, but the head tax only accounts for about 1% of the total income of farmers. It's not much money at all, just one piece of cloth a year, about 150 coins. If you are really generous, why don't you just not ask for it? I will just stop collecting head tax in the future. Wouldn't that be more popular with the people?
Just for this 150 wen a year, the government went to great lengths to implement the tax distribution system, offending so many people, and then competing with the local governments for financial retention. In the end, the tax still has to be imposed on the people. I really can't see how this policy has any benefit at all.

Lu Jin's original idea was to abolish the head tax directly after the world was unified, breaking the shackles that restricted the population growth rate. After all, the head tax was not much money, so it might as well not have it.

Then the question is what to do with local finances? This is also simple. Aren’t the 25% corporate income tax and the 6% value-added tax on companies much better than the head tax?

In the future, when local governments attract investment and set up companies, the central government will take a small portion of the taxes paid by the companies, for example 40%, and the local governments will take the majority of 60%, providing sufficient funds for local development.

As for state-owned enterprises, they do not collect taxes, but directly hand over their profits. One tenth is retained as employee benefits, thirty percent is used as corporate reserve funds for emergencies, expansion of scale, or investment in technological research and development, and the remaining 60% is handed over to the central government.

As long as this tax-sharing system is implemented and the head tax and corvee are abolished in the future, the local finances will only be left with a share of corporate income tax.

Do local governments want to build railways? Attract investment! Do local governments want to build bridges? Attract investment! Do local governments want to build more schools? Attract investment!
In short, whenever your local government lacks development funds, you must find ways to attract investment and set up more companies and factories, so that you can have more financial retention!
By then, you won't have to urge them. These local officials will naturally try their best to attract investment, and factories will spring up like mushrooms after a rain. In order to gain more profits, factory owners will naturally pursue technological progress, and industrialization will become a natural thing. Even if Lu Jin dies in the future, as long as this system continues to operate, the process of industrialization will not stop.

Instead of doing some bullshit thing like allocating taxes based on land and competing with the local governments for that pitiful little head tax, why not find a way to guide them to open factories? Wouldn't you collect more taxes this way?

Moreover, industrialization is not simply about writing a few books on physics and chemistry, nor is it simply about developing a few technologies. As long as you clarify the system and build a breeding ground, then factory owners will naturally give birth to more and more technologies in pursuit of profits. This is what later generations often call the relationship between industry, academia and research.

As long as this framework of industry-university-research cooperation is established, technology will naturally advance rapidly. Even if the imperial court and government officials do not care, the capitalists themselves will invest more money in the research and development of technology, so that they can maintain their advantage in commercial competition.

After finishing talking about the investment promotion method of bidding, Lu Jin said again.

"Most of the Marshal's finances are now used for military expenses, so there is really not much money to invest. However, the landlords and gentry have a lot of money hidden away. Now we have blocked their way to annex land with the nine-tier tax. If they still want to keep their family's wealth, they will naturally look for other ways out. This is a good opportunity for local investment. Local governments should guide them to invest in industries that the government needs."

Wang Guangyang frowned and thought about it, still feeling a little unbelievable, "Will this work? Will those gentry and powerful people be willing to invest their money?"

Lu Jin took a sip of the tea beside him, then said, "You three have also read Guan Zhong. In his book, Guan Zhong advocates that human nature is to seek benefits and avoid harm, so we should use benefits to guide them. It is not easy to get them to invest. Just find a role model and start a company. As long as this company can make a lot of money, others will naturally follow suit."

After the economics class, everyone took several pages of notes home.

Li Shanchang was busy with the work of allocating food and fodder, and also had to deal with government affairs, but he also knew the importance of what Lu Jin said. If Lu Jin talked about economics in the future and he knew nothing about it, he would definitely be far away from the center. So he also sent a minor clerk to listen to the lectures, took a full notebook back, and privately repeated to him what Lu Jin had said in class.

The newcomer Zhan Ding was also amazed after listening to this class. He felt that Lu Jin's insights and knowledge were incredibly broad. He could talk about astronomy and geography, military strategy, governance, and even business. This made him very interested in Lu Jin. He heard that Xia Yu had a complete set of handwritten "Gongshu Secret Classic" and the quick-learning military strategy that Lu Jin had given to the generals before. He borrowed them all and studied hard for two days.

After finishing reading all these books, I couldn't help but sigh that they were simply incomprehensible. I could understand physics, chemistry and biology at first, but after adding various formulas and theorems, I couldn't understand them at all.
When he returned to his temporary residence in Jiankang, Fang Guozhen's wife called him immediately, "Mr. Zhan, are you free? I have something to ask you."

(End of this chapter)