Tax Policy and Economic Growth Youth Economist Series

Author: Ma Shuanyou
Publisher:
Publish Date: 2001-09-01
Features: The theoretical analysis in this book is based on models, while the empirical part focuses on experience analysis. It employs game theory analysis, institutional analysis, and comparative research methods to study the relationship between taxation policy and economic growth from multiple perspectives. The research objectives of this book are: first, to formalize the theories related to taxation and economic growth, including the IS-LM model and the Mundell-Fleming model in the theory of aggregate demand, the economic effects of taxation on investment, savings, and labor supply, the efficiency costs of taxation, and the relationship between taxation and endogenous economic growth; second, to conduct an empirical analysis of taxation and economic growth in China, focusing on estimating the tax multiplier, the relationship between tax expenditure and investment, the elasticity of savings, China's Okun's Law considering tax factors, China's Laffer curve and optimal tax rate, the marginal tax rate of local taxes and its relationship with regional economic growth, the economic growth effects of tax structure, the infrastructure elasticity of total output, the contribution of taxation to technological progress, and the effects of non-tax revenue; third, to propose fiscal revenue policy choices to promote China's economic growth. It is specifically divided into 11 chapters:
Chapter 1 studies the role of taxation on equilibrium output from the perspective of aggregate demand, analyzes the IS-LM model in the traditional income-expenditure model, estimates China's IS-LM model, and measures the regulatory effects of taxation policy on economic growth.
Chapter 2 analyzes the impact of taxation on capital formation by solving the firm's maximization problem, introduces three empirical analysis models—accelerator model, neoclassical model, and Q model—as well as international empirical evidence. China's empirical analysis shows that non-state-owned economy and foreign direct investment respond positively to tax expenditure, indicating that tax incentives promote private and foreign direct investment.
Chapter 3 analyzes the life-cycle model of taxation and savings, reviews international empirical results, and examines the relationship between China's taxation and savings deposits, household total savings, and national savings. It finds that all three savings indicators have positive income and interest elasticity, deposits and total savings exhibit the expected negative tax elasticity, but household total savings are positively correlated with taxes.
Chapter 4 analyzes the relationship between taxation and labor supply within the framework of consumer utility maximization, provides international empirical evidence, and estimates China's Okun's Law after tax extension using non-agricultural labor data. It reveals that a 1% increase in China's economy and taxation can respectively lead to a 0.46% increase in non-agricultural employment and a 0.27% decrease in it.
Chapter 5 studies the impact of taxation on economic growth from the perspective of efficiency costs, primarily using partial and general equilibrium methods to analyze the efficiency costs of taxation and introducing computable general equilibrium models.
Chapter 6 analyzes the growth effects and transmission mechanisms of taxation policy using new economic growth theory, categorized by different treatments of leisure, and summarizes the results of tax experiment simulations. The basic conclusion is that levying income taxes on labor and capital reduces economic growth.
Chapter 7 examines the relationship between macro tax burden, marginal tax rates, and tax structure with economic growth. It estimates China's Laffer curve, optimal macro tax burden, local marginal tax rates, effective tax rates on capital, labor income, and consumption expenditure.
Chapter 8 studies the impact of taxation on economic growth in conjunction with fiscal expenditure. It finds that the final effects of various taxes depend on their allocation. If taxes are used for public capital investment, they can promote private sector economic growth; if used for technological transformation investment, human capital investment, and R&D, while improving the efficiency of the latter, they can promote China's technological progress.
Chapter 9 proposes tax policies to promote economic growth and improve resource allocation efficiency from the perspective of tax system optimization. It analyzes the theory of tax reform paths and international comparisons of tax reform, and finally proposes tax design countermeasures to promote China's economic growth, including reform ideas for the value-added tax, business tax, corporate income tax, personal income tax, and other business taxes.
Chapter 10 analyzes the problem of excessive fees and conducts a comparative study of non-tax revenue abroad, proposing basic countermeasures for China's "fee-to-tax" reform.
Chapter 11 examines tax evasion and tax administration strengthening to ensure that the spirit of tax policies is upheld. The models and game analyses in this chapter show that factors such as tax rates, inspections, penalties, tax administration costs, and tax objectives have a decisive impact on tax evasion. Countermeasures to curb tax evasion include optimizing tax laws, aligning government spending with taxpayer preferences, increasing inspection probabilities, imposing strict penalties, and addressing the quality and incentive-restraint mechanisms of tax personnel.