The Sustainable Development Of The Tax Revenue And The Economic Growth In Hunan Province And Policy Proposal

As the world economies evolve to their present states, modern market economies are neither perfectly free market economies nor highly planned economies, if stictly judged from the economic systems, but a mixed economy. The market can allocate the resources efficiently through the price mechanism. Governmental fiscal regulations are necessary where the market is not perfectly competitive or even fails. Government lexies taxes to concentrate part of the revenue according to the governmental budget which is formulated on the basis of political decisions, and then reallocate the part of resources in the form of governmental expenditure in the areas where the market fails. To that extent, national economy is a mixture of the market economy and the goverment economy, or of private economy and public economy. According to the size of public economy worldwide, it accounts for at least 1/3 in terms of the percetage of policy income and expenditure to the national economy. Due to the innegligible size of public economy, public economic activities naturally have a great impact on the growth of the national economy as a whole.Tax, the biggest part of the public economy, is the major means the government applies to raise government income and reallocate resources. Tax is defined as the price of public goods, ie, the price residents pay to buy and consume public goods, when analysing the public economy with the market approach. Due to the decrease of disposable income of people resulted from the tax, it changes the stucture of the price, influences the optimal behavior of the economic person, the capital accumulation, and the supply of labor, thereby slows down the growth of economy. On the basis of the aforementioned theoretical considerations, this paper researches into the economic growth of Hunan province from the angle of tax revenue.Theoretically, tax has determined negative effect on economy. Tax has a negative mulitplier for the output in terms of Keynesian theory. supply-side economists hold that high marginal tax rate impede the level of economic activity and the growth rate, thus advocating cutting down the marginal tax rate. The theory of economic growth also maitains that tax will at leasr lower the path of output level and the economic growth rate in the course of transition to the steady state of growth. Although the neoclassic theory of economic growth believes that the economic growth rate will only be subject to the temporary influence of tax , and the only permanent influence is the...