Institutional Analysis And Optimized Design On Tax Burden Of China

This article focuses on the institutional analysis and optimized design on tax burden of China. First, this article gave a clear definition of tax burden and conducted an in-depth theoretical study on the principle, scale, effects and incidence of tax burden. Secondly, it put forward the tax burden principle in China including the principle of financial income, economic growth, tax equity, constitutional tax and strengthened the importance of tax equity. Finally, this article suggested that the sticking point would not be the scale of tax burden, but the issue of tax equity. Actually, tax equity is the basic issue of this article. And only by insuring the horizontal equity, vertical equity or the fairness of the tax structure, the role of tax can function well in collecting revenue, controlling economic and adjusting distribution to achieve fast and good economic development.This article can be divided into five parts.The first part studied the theory of public goods to make difference between public goods and private goods so that the following parts could give more detail research on some important issues of tax burden. By doing that, the relationship between tax and public goods was pointed out. Tax is the compensation for the consuming of the public goods and services by the taxpayers. Expect for tax, administrative charges account for a large proportion of government revenue in China. Nevertheless, administrative charges should not be added into tax revenue in terms of tax burden. It will cause "crowding-out effect" if broadening the scope of tax into tax plus charges. The result will be obvious that not only the government has no enough money to control economic, but also local authorities will collect excess charges. This part also discussed the principle, scale, effects and incidence of tax burden to indicate the actuality of tax burden in China.The second part evaluated the tax burden level in China by reviewing Chinese tax history, made international comparison and analyzed the equilibrium of tax burden. The research discovered that on the one hand tax burden in China is not high and could adapt to Chinese current economic growth; on the other hand, the sticking point of tax system is the inequitable tax burden such as the unfairness in ownership, in industry, in region and even in taxpayers. The unfairness resulted in the false recognition of the growing of tax misery index and wide attention by the researchers. In fact, it is necessary to study tax burden. Not only can reasonable macro tax burden enhance satisfaction of taxpayers, but also it can promote the sustained and steady economic growth. Then, this part brought forward three basic principle of international comparison which including consistency of statistics, data and sample. To select statistics and sample only according to the need of the article when doing comparison disobeys the basic principle of science research.The third part considered the macro tax burden as one of the fiscal policy and analyzed its function and effects from the perspective of western classical economic theory such as Keynesians and supply-side economics. The research showed tax burden was correlated negatively with economic growth. But what caused the rapid growth of economy and taxation simultaneously in China recent years? The reasons were the economic growth, the effective macro-economic control, the enhancement of tax regulation and collection, the rapid rise of goods price and other factors. Tax burden, however, is a double-edged sword. Higher tax burden does increase the government revenue, but it would impede the sustained economic growth in the long run.The fourth part indicated the background and feasibility of tax cut in developed countries and suggested it would be infeasible to conduct massive tax cut in China. The basic orientation of Chinese tax sysytem reform should emphasize the stability of fiscal revenue. Confronting with the impact of world financial crises, it is essential for Chinese government to achive effective combination of structual tax cut with structual tax increase, with charges decrease, with administrative expenditure. Furthermore, tax cut is only one part of macroeconomic regulation. And the key of other parts rely on the increase of public investment, disposable income, domestic demand.The fifth part suggested optimized design on equity of tax burden. After drawing useful lessons form international experiences, this part estimated a reasonable numericl range of tax burden. From the writer's point of view, there is no the " optimal" tax burden and tax burden in one country should adapt to the economic growth of that country. The main goals of a reasonable tax system are to insure the equity of tax burden and the stable tax revenue. And this part gave some advises on the reform of Chinese tax system in terms of income tax, turnover tax and property tax. Moreover, in order to make the tax system function well, it is also essential to implement some necessary supporting policies such as improving the legal supervision system, relieving the administrative charges burden and strengthening the financial system.