The Impact Of Taxation On Employment

China is a country with large population, and each person has a scarcity of resources. The unemployment is a big problem. On the one hand, there are many surplus labor forces in rural areas, university graduates who are looking for jobs, unemployed persons in cities, which affect the living standards of family. On the other hand, there are difficult for firm to recruit workers, which would cause the rising of cost. To solve the employment problems need the market and government work together.There are many researches about employment at home and abroad, and the researches about factors of non-tax are comprehensive. However, there are fewer researches about factors of tax, and most of them analysis how the tax factors affect labor supply. Therefore, this paper will examine how the tax factors impact the supply of labor, the demand of labor and the employment.There are five parts in this paper. The first part introduces the research background, the research question, methods and structures. In the second part, analyze the labor supply depend on the theory of consumer behavior, analyze the labor demand depend on the theory of firm profit maximization, as well as employment equilibrium. In the third part, I will estimate the effective tax rate of labor, capital and consumption. At the same time, In the fourth part, make empirical research about how the employment would be impacted by the effective tax. In the last part, draw the conclusions, and make the suggestions of tax reform recommendations.In the theory part, depend on consumer theory, families maximize their utilities.MUc/MU1-l=P/W. when tax is undertaken by families, the disposable income, price, and income of assets would change, as well as the labor supply Depend on firm theory, firms maximize their profits,MPl/(?)=MPK/(?)=1/(?).When tax is undertaken by firms, the price of labor, capital and products would change, as well as the labor demand.In the empirical part, calculate the tax rate of labor, capital and consumption. Analysis the factors which have affect on the labor market. Analysis what the effect be by constructing regression equation. The results show that, taxes of labor make labor supply, labor demand and employment increase. Taxes of capital have no influence on labor supply, however, they make labor demand and employment decrease. Taxes of consumption could make labor supply, labor demand and employment decrease.Depend on the results, increase the rate of labor tax, as well as, decrease the rate of capital tax and consumption tax will promote employment.There are some innovations. First, research the relationship between taxes and labor supply depend on consumer theory. Second, research the relationship between taxes and labor demand depend on firm theory. Third, calculate the tax rate from1985to2011.Without a doubt, there are many shortcomings, for example, the sample is small, the data come from several ways, and didn’t consider the expenditure.