Research On The Optimization Of China's Tax Policy Under The Open Economy

Tax reduction and tax optimization are the means to gain international competitiveness.The trump tax reform bill,seen as the "biggest tax cut in 30 years",and the new wave of global tax cuts it could trigger will reshape the distribution of economic resources in the world.In order to cope with trump's tax reform and international tax competition,China has introduced a number of tax cuts in 2018,with the cumulative scale of tax cuts exceeding 1 trillion yuan.However,according to the preliminary calculation of the national bureau of statistics,China's annual GDP in 2018 was 90.03 trillion yuan,only 6.6% higher than 2017,which was the lowest in 28 years.Most of the existing research on tax policy optimization is established under the framework of closed economy.In order to promote China's economic growth and deal with the impact of trump tax reform and global tax competition on China's economy in a more positive manner,it is imperative to discuss the optimization of China's tax policy comprehensively and deeply under the open economy.At first we studies the influence of capital income tax,labor income tax and consumption tax on economic growth under the framework of optimal taxation theory of big country open economy,and then comes to the theoretical proposition of policy optimization of capital income tax,labor income tax and consumption tax of big country.Then,we build a dynamic multinational CGE model of tax policy optimization for China,and the effects of China's current tax policy are simulated,so as to verify the theoretical proposition.Finally,the optimization scheme of China's tax policy is designed,and policy Suggestions are put forward based on theoretical research conclusions and simulation results of dynamic multinational CGE model.The main conclusions of this paper are as follows:Under the conditions of open economy,it is very likely that the optimal capital income tax of big countries is zero,or the optimal capital income tax of big countries is very low.Lowering the corporate income tax rate is conducive to promoting the flow of international capital into China.Although it is not conducive to the accumulation of public capital,the increase of international capital inflow is greater than the decrease of public capital accumulation.Reducing capital income taxes in big countries could boost domestic growth,if they are not very low.The multi-country CGE model simulation results of China's tax policy optimization also show that China's current corporate income tax rate is higher than the optimal level,and reducing China's corporate income tax is conducive to promoting China's economic growth.In large countries with open economy,the optimal labor income tax rate is very high.Only when labor income tax is very high,big countries can reduced the labor income tax to promote economic growth.Reducing labor income tax is not conducive to the accumulation of public capital,resulting in a decline in the total investment scale,which is not conducive to economic growth.The multi-country CGE model simulation results of China's tax policy optimization also show that China's individual income tax is lower than the optimal level,and the reduction of individual income tax cannot promote China's economic growth.In large countries with open economy,If the consumption tax is entirely borne by consumers,the tax rate will have little impact on economic growth.If the consumption tax is Shared by consumers and enterprises.Although the reduction of consumption tax is not conducive to the accumulation of public capital,it can reduce the cost of enterprises.When the increase of investment caused by the reduction of consumption tax is greater than the decrease of public capital accumulation,the reduction of consumption tax can promote economic growth.The multi-country CGE model simulation results of China's tax policy optimization show that China's current value-added tax is higher than the optimal level,and the reduction of value-added tax can promote China's economic growth.Based on the theoretical analysis and the simulation results of the multinational dynamic CGE model,three policy suggestions are put forward,that is,to increase the statutory rate of corporate income tax,strengthen tax collection and management and increase the intensity of VAT reduction.