Studies On The Relationship Between Tax And Investment

Part 1:Facing the deflation situation these years, Chinese government implemented proactive fiscal policy, which had greatly promoted the economic growth of China. The methods mainly include issuing national debts, expanding government expenditures, the way of tax cuts is rarely taken. Much more emphasis should be put on the way of tax cuts to promote private investment.Part 2:in the theoretical analysis part, we mainly build an enterprise investment function, which introduce many policy variables, including tax credit, accelerated depreciation, interest and tax rate, to achieve the maximum of enterprise value. Different variables have different effects on investment, and government can make use of different variables to achieve the target of promoting investment.The relationships between tax and risk, tax and foreign direct investment are also discussed deeply in this part. Part 3:A positive analysis on the relationship between tax expenditures and investment is given. By analysis, we can see that tax expenditures produced remarkable effects on the investment of non-state owned enterprises, while the effects on the investment of state owned enterprises are not clear. Tax preferences on foreign funded enterprises have produced obvious effects on introducing foreign funds.Tax expenditure policy, including tax credit, accelerated depreciation has been broadly applied on tax practice, while our country put much more emphasis on preferential tax rate, rarely take other tax expenditure methods. There are more tax problems on industries structure, district development, different property enterprises. These problems are discussed from VAT (value added tax), corporate income tax, personal income tax and tax preferential in details.Part 4:According to the problems mentioned above, measures should be taken to reform tax system. Firstly, problems in preferential tax regimes should be solved, much more emphasis should be put on the industry of science and technology, not the district tax preferential. Secondly, tax system should be further promoted, the measures include transferring GNP type VAT to consumption type VAT, unifying income tax for Chinese funded and foreign funded enterprises, and improving tax rate structure and adding deduction items of personal income tax, etc.