| Tax reform,as an important part of the superstructure,is essentially a process of redistribution of interests of vested interest groups.It will cause a lot of games among many interest groups.The interest groups,as rational players,must abide by the game strategy,and adjust their actions according to the opponent's actions.Finally,the result of their game will be in equilibrium.Game theory,as a method to study the interaction between competitors,can accurately depict the rational actions of the players in the historical events.Income tax which originated in the United Kingdom,was regarded as a ‘good tax' by many countries,because it has many advantages,such as the principle of fairness,levying on the net income,and so on.Income tax was recognized,understood and respected by the Chinese people in the late Qing Dynasty.In the late Qing Dynasty,the government's discussion on levying income tax should be no later than 1906,and the government's preparations for levying income tax should be no later than 1910.From 1912 to 1927,the Beiyang Government has three times to prepare to levying income tax.The government has succeeded in imposing income tax on salaries of the officials,but it was soon canceled because of fierce oppositions from interest groups.After many years of preparation,the Nanjing National Government succeeded in levying income tax in January 1,1937.The long and tortuous process of income tax was affected by many factors,such as the level of productive forces,the will of the ruling class,the awareness of the public rights,and so on.If we can choose a historical event from the tortuous process,and use game theory to analyze the event,We will find many characteristics of the rational players who determine the tortuous process.In the study of the history of income tax,rational players are often ignored.The purpose of this paper is to find out how the rational players decide the tortuous preparatory process of the income tax.If we read and summarized the literature of the Chinese history of preparing to levy income tax,we will find that two research fields has been neglected by scholars.One field neglected by scholars is the study of historical events in preparatory process of the income tax,the other is the study of rational players.If we reviewed and studied the historical event which took place in the preparatory process of the income tax in China in 1920,we can conduct an in-depth study of the interaction between the Beiyang Government and the chambers of commerce by using game theory.In this study,we focus on the analysis of rational players how to decide the game results to be in equilibrium,and we hope to find out the dynamic path.History is a mirror that reflects the vicissitude of life.With the help of the study of the historical event in preparing to levy income tax,we hope to find the general law and special law in the reform of tax system.It can provide reference for current tax system reform in China.These laws will be helpful to the reform of tax system in China.In September 15,1920,President of Republic of China issued a decree and announced for the official time of levying income tax.The official time of levying income tax is January 1,1921.Subsequently,the Ministry of Finance issued a series of documents of levying income tax,such as the documents of collection scope of income tax,the enforcement rules of income tax ordinance,and so on.The decree of levying income tax has been strongly attacked by the chambers of commerce,and the objections eventually evolved into a nationwide campaign against income tax.In the game between the Beiyang Government and the chambers of commerce,the chambers of commerce were mainly based on the following reasons against levying income tax.Firstly,the government's decision to levy income tax is not approved by Congress,so the decision is illegal.Secondly,military spending is the root cause of financial difficulties,because it accounts for about 80% of the total fiscal expenditure.The methods to solve the financial difficulties of the government is levying new taxes,not reducing the troops.These methods obviously have the order reversed.Thirdly,the warlords used military expenditure to buy lots of arms,and launched wars again and again.The wars led to a difficult life for the people.The taxes which hamper commercial development,such as likin,has brought a heavy burden for the people.If the government can not reduce the troops and cancel the taxes which hamper commercial development,the people can not accept the new tax.Fourthly,because the country does not carry out scientific accounting system and investigation methods,the rich usually hid property and concealed income.The behaviors,which the rich to pay less income tax by hiding wealth,violated the principle of fairness.Fifthly,in the past,the government had transferred education funds to the military,and refused to repay the debt on schedule.So we will refuse to believe that a government without credit will fulfill its commitment to spend tax revenue to Education.In the game,the chambers of commerce adopted the following strategies.Firstly,the chambers of commerce adopted the strategy of the joint coalition.In order to oppose the imposition of income tax by the Beiyang Government,the chambers of commerce and the provincial assemblies established a broad joint coalition,the coalition has seriously undermined public support for the decision of levying income tax by the government.Secondly,the chambers of commerce adopted the strategy of taking away the burning woods from under the boiling cauldron.Based on the fact that government's decision to levy income tax is not approved by Congress,the chambers of commerce declared that the decision to levy income tax was illegal.The chambers of commerce claimed that everyone has the right to refuse to accept the decision.Thirdly,the chambers of commerce adopted the strategy of isolating the government from the public.By exposing the government's previous misdeeds,the chambers of commerce has aroused the public's loathing of the government.Fourthly,the chambers of commerce adopted the bundling strategy.The chambers of commerce asked the government to demolish likin,otherwise refuse to accept the income tax.The chambers of commerce will strongly disagree the government to levy income tax and likin in parallel.Fifthly,the chambers of commerce adopted uncooperative strategy.The chambers of commerce called on all of businessmen not to cooperate with the government,and called on them to refuse the government to check their account books and to know their income.Sixthly,the chambers of commerce adopted the strategy of threatening the government.If the government would not abolish the income tax,the Provincial Assembly of Jilin province claimed that they would stop providing revenues to the central government.If the provincial government of the Jiangxi province would not require the central government to abolish income tax,the chamber of commerce in Jiangxi province will organize large-scale demonstrations across the province.In the game,the Beiyang Government adopted the following strategies.Firstly,the Beiyang Government adopted the strategy of the axis of collaboration.The Beiyang Government and provincial governments set up an alliance to support levying income tax.Secondly,the Beiyang Government adopted incentive strategy.In order to encourage provincial governments to prepare income tax,the Beiyang Government has promised to reward those provinces who have raised large income.Thirdly,the Beiyang Government adopted conciliatory strategy.By means of explaining and lobbying,the Beiyang Government want to persuade the chambers of commerce to withdraw the decision.Fourthly,the Beiyang Government adopted signal strategy.By transferring information that the relevant documents had been made,the government want to show the attitude that the government would not cancel the income tax.Fifthly,by promulgating policy,the government promised that income tax revenues would be used for education and Industry.Sixthly,the Beiyang Government adopted the concession strategy.Under the pressure of fierce opposition,the government announced the postponement of levying income tax for three months,and tried to reduce opposition and resistance.Seventhly,the government adopted the strategy of setting a good example.By levying income tax on officials' income,the government tried to establish a good image of fairness.A good image of fairness was easier to dispel public doubts.There are two reasons for the failure of the government to levy income tax.One reason is that the government had lost public supports because of its previous misdeeds,the other is that the opposition from the chambers of commerce had deadly hit the government.The joint coalition and the axis of collaboration are the important features of the game event.There were many games among the chambers of commerce,the provincial assemblies and the governments.The joint coalition and the axis of collaboration were the results of the games among many groups.The game strategy is the action rules of the players,which determined actions should be taken according to the development of the situation.Social backgrounds and political realities are important components of game strategy.The social background at that time included the following aspects.Firstly,the campaign of learning the western modern thoughts since the late Qing Dynasty,has made more and more people accept the thoughts such as democracy,constitutionalism and civil rights.The campaign has made the national bourgeoisie have consciousness of tax rights,too.Secondly,the segmentation by warlords and the endless wars severely weakened the central government authority.And it has led provincial governments to refuse to obey the orders of the central government.The contradiction between the central government and the provincial government,provided the opportunity that the chambers of commerce and provincial assemblies established alliance for denying income tax.the government's misdeeds,such as refusing to abide by the Constitution and dissolving parliament,destroyed its credit.It provides an excuse for the chamber of commerce against the government's decision of levying income tax.Fourthly,in order to take some provinces as their sphere of influence in China,Some imperialist countries chose the warlords in the provinces as their agents.The actions of the imperialist countries,provided enough space for the chambers of commerce to refuse the government‘s decrees.Fifthly,the central government represents the interests of the feudal landlords and compradors,its class-character determined that the central government will be challenged by the bourgeoisie.The game between the Beiyang Government and the chambers of commerce,was actually a struggle for the political rights of the national bourgeoisie.The classical game model of incomplete information,emphasized the insufficiency and asymmetry of information.The game is a dynamic game with incomplete information.It differs from the classical model because the players could get complete information by playing more repeated games.With the continuous increase of information,the game with incomplete information becomes a game with complete information in the last stage,but the game is irreversible,except for its final stage.Based on the above understanding,I construct a dynamic game model with increasing information.In the game model,there are three players,they are the Beiyang Government,the chambers of commerce and the virtual player named ‘nature'.The virtual player named ‘Nature' can be understood as a combination of all the external elements in the model.‘Nature' is a near almighty judge.By listening to and comparing the reasons of both sides,he almost perfectly decides the success probability of each player.The player who is making decision can perceive his own probability of success of this stage,as well as the probability of success of both sides prior to this stage.But the player can not perceive the success probability of the opponent after this stage.The strategies of both players are involved in the model with the help of ‘nature'.If a player wants to have a higher probability of success that given by ‘nature',he must find some compelling reasons for his action,and his reasons must be better than those of his opponent.Because of incomplete information,the player in the decision-making process can not accurately predict his opponent's actions and reasons in the future.If you can understand how the strategies of both sides play roles in the model,you will better understand the model.At every stage of the game,the rational players should choose the best expected utility.After three stages,both sides have full information.At the last stage,According to full information of both sides,The government must know the following situations before he make their decisions.Firstly,if the government makes a decision not to levy income tax,his expected utility is 0.Secondly,if the government makes a decision to levy income tax,his expected utility is-1.So the government makes a decision not to levy income tax.The result of the game is in equilibrium at the last stage.Based on the dynamic game model with increasing information,this paper makes a theoretical analysis of the game between the Beiyang Government and the chambers of commerce.The game between the Beiyang Government and the chambers of commerce has provided the following enlightenment for our current tax system reform.Firstly,the reform of tax system should meet the requirements of productive forces and production relations.Secondly,consensus before the reform can effectively reduce the resistance to reform.Thirdly,the strong authority of the central government is the political guarantee for the success of reform.Fourthly,the government should promote tax reform with abiding by the laws.Fifthly,the government should pay attention to methods and strategies to promote tax reform.Sixthly,the establishment of effective interest appeal mechanism can reduce the risk of the game.This paper has the following deficiencies.Firstly,the collection of historical data is not rich enough.Secondly,it is difficult to identify that the historical data is objective or not.Thirdly,the dynamic game model with increasing information is simplified. |
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