Game Relations Theory. Tax Legislation

When analyzing behaviors and decisions of various kinds of economic entities, who act on directly each other, and social economic problems and phenomena caused by these economic behaviors, the game theory is an effective analysis tool.Taxation belongs to the category of distribution, is one kind of economic benefit relation. This relation must be carried out by law which regulates the tax obligation and tax right. Tax law will affect behaviors and decisions of kinds of economic entities when it set the tax obligation and tax right. The ideal taxation will fulfill two principles: equity and efficiency. But achieving this objective depends on the level of tax legislation. It is undoubtedly a helpful try to inspect various kinds of benefit relations in the process of tax legislation by the methods of game theory, because it helps to improve tax law's quality and appropriately deal with tax distribution.This thesis tries to apply game theory to the process of tax legislation. Above all, game relations among diversified benefits entities related to tax legislation are put forward. Then, on the basis of analyzing the behavior characteristic of the game participators, and through structuring models, the main factors affecting behaviors of every benefit entity are expounded. But, how to apply relevant conclusions to the practice of tax legislation will not be deeply discussed, remain to study further.This thesis divided into four parts.The first part discusses the application of game theory in the process of tax legislation. As a kind of effective analysis tool, game theory is widely applied to the analysis of economic decision. The games among diversified benefits entities related to taxation induce the instituting and changing of tax law. So, it is feasible to analyze the game relations between government and taxpayer, of different class governments and of different countries.The second part analyzes the game relations between government and taxpayers. It is divided into three stratums. Firstly, on the basis of explaining howinterest groups influence tax legislation, the game between government and potential taxpayers is analyzed through Leontief model, which affect the extent and depth of taxation and the level of GDP. Secondly, the game between government and tax official is analyzed through principal-agent model. Finally, some problems about strengthening the implement mechanism of tax law are analyzed through supervision game of tax administration.The third part analyzes the game relations of different class governments. The general division theory of tax legislative is first explained simply. Then, the tax administration and revenue division theories are farther analyzed through the general tax-sharing model under centralization of state power and the repetition game model under federalism, which affect the behavior and decision of center and local governments. In the end, the practical situation in China is briefly explained.The last part analyzes the game relation of countries about tax legislation. This game based on the tax competition and coordination theories. The prisoner dilemma of tax competition and the tariff war all show that tax legislation or policy of a country already become the result of tax game as its affect overstepping country frontier.