Optimal Taxation, Economic Growth And Income Distribution

Tax is an important instrument to guarantee national financial resources,it is also an important tool for government to implement macro-control, macro tax burden is the core issue of tax policy,it is important for the government to fulfill its function of economic adjustment whether the level of macro tax burden is reasonable or not. Since tax reform in1994,macro tax burden in our country rised strongly from13%in1993up to24%in2012.In addition,tax structure in our country is in a state of serious imbalance,in2013, the ratio of corporate tax and personal tax reaches up to9:l,the ratio of indirect tax and direct tax is7:3,the current tax structure is difficult to give full play to the role of adjusting the gap of income distribution,then it becomes a urgent problems to be solved that how to choose a reasonable level of macro tax burden and tax structure which is most conducive to economic growth and income distribution.In addition to the role of raising finance income,in some areas,tax also can decrease externals,since the reform and opening-up, our country has experienced an average annual growth rate of10%,accompanied by serious pollution of the environment which becomes a threat to human survival, according to the experience of developed countries, levy ing pollution tax can not only have effect on energy saving, emission reduction and environmental protection, income of pollution tax can also be used to replace other distort taxes,so there is certain significance to explore the optimal combination of pollution tax and other distort taxes for sustainable development of economy;Besides,we can also change the way of levy to reduce the externals of economic activity, in2010June,tax reform of crude oil and natural gas from specific tax to ad valorem tax has been launched in various regions of our country,then which way is better? Specific or ad valorem tax? what are the effects of tax reform?This is the question we will answer;Previous studies on the optimal tax often assumes that the government can levy a tax on all income,in our country, as the management of income registration is not perfect,it is very difficult for the tax department to grasp the income information accurately,which leads to the tax of personal income only covers part of the population,therefore, the research on China’s optimal tax must consider the factors of the tax collection and management,this paper will discuss China’s optimal tax policy and its effect on income distribution combined tax revenue collection and management. Contents and main conclusions of this research are as follows.First, this research discusses the optimal choice,influencing factors and economic effects of macro tax burden in our country.We obtain that the optimum of China’s macro tax burden is7.84%, when relative congestion increases1units, the optimal macro tax burden increased5.16%percentage points,the level of optimal macro tax burden increases with the increasing of the scale of public expenditure, externals of public expenditure and output elasticity of capital in private sector,but decreases with the increasing of output elasticity of capital in public sector.When macro tax burden in reality is reduced to optimal level,private capital and consumption per capita both increase66.43%, stock of public capital and output per capita increase42.84%,the level of welfare increases39.93%; Congestion of public service will weaken the expansion effect of tax relief,when the level of overall congestion is higher than l,the negative influence of relative congestion is bigger,when the level of overall congestion is smaller than l,the negative influence of absolute congestion is bigger.Through this research,we provide a general analysis framework for the choice of optimal macro tax burden.Second,this research discusses the optimal choice of tax structure and its economic effect in our country from both sides,one is from the perspective of the behavior of government,the other is from the behavior of the private sector.First we set up a theory model in which the structure of government expenditure influence optimal tax structure,then this paper made an empirical analysis on the optimal tax structure and its economic effects;Then based on an endogenous growth model of innovation driven,the paper estimates the optimal combination of pollution tax and other distort tax and its economic effects.This research obtains that the optimal tax structure is different under different targets, the ratio of infrastructure spending and transfer expenditure influences the optimal tax structure;In the calibrated economy,the optimal pollution tax is23.48%,it will increase along with the improvement of the efficiency of R&D department and output elasticity of intermediate products, it will decrease along with the increase of public expenditure and time discount factor,Compared with the sample economy pollution tax only will bring the largest economy increase, while pollution tax and capital tax combined will make the welfare biggest;There is not sure to promote economy increase or welfare improvement by raising the efficiency of pollution abatement only,it is more useful to economy and social welfare when cutting down the pollution elasticity of health,production elasticity of health and the preference of health.Through this research,we find a framework of optimal tax structure considering the function of the government,then we establish a framework which can combine pollution,the accumulation of healthy human capital and economic growth by which we can compare the different effects of environmental regulation.Third, this paper establishes a theoretical model for comparison of the effects of ad valorem tax and specific tax,then bases on Difference-in-Difference,this paper evaluate the effects of oil and gas moving from a volume-based to value-based tax system,we find that ad valorem tax is more conducive to reducing externals of production and raising tax revenue,specific tax is more conducive to improve welfare,this theory provide the standard of how to choose the way of levy;Then we find that tax reform has impelled the energy consumption per unit of output to fall between7.90percentage points and8.55percentage points,the emissions of pollution to reduce about1556tons and revenues of resources tax per capita to increase between2.74percentage points and3.03percentage points relative to the sample average in the western area,then we re-estimate the same models using many other methods and conclude the similar results, this research provide s empirical support for comprehensive implementation of ad valorem reform applies to resource tax.Fourth, this research introduces the factors of tax collection and administration into the model of optimal tax theory,in a game model of two stages, we analyze the optimal enforcement policies,we find that the optimal choice of individuals is to tell truth when all the individuals have the same risk preference,the amount of optimal punishment is the bigger the better,there are different effects the degree of risk aversion,the degree of attention to’Social status’,the cost of audit and the original structure of allocation on the optimal tax progressive,the optimal rate of audit and income equalization,under the assumption of endogenous public expenditure which is useful for private consumption,the optimal rate of audit decreases,the optimal tax progressive increases,the tax policy plays an important role in narrowing the gap of income distribution,the improvement of social welfare is obvious,through this research,we conclude that the optimal choice of tax is not only the choice of tax rate,it also combines the choices of audit rate, penalty rate and the scale of public expenditure which is useful for private consumption,the optimal policy of implementation needs considering the degree of risk aversion,the degree of attention to’Social status’,the cost of audit,the original structure of allocation.