Study On The Relationship Between The Tax Structure And The Degree Of Democratization

With the continuous development and improvement of the economy, our country’s tax structure has been adjusted for many times. Especially in 1994 we launched an in-depth and extensive tax reform, which further improved the tax system in our country. Currently indirect taxes still take up a great proportion in our tax structure. The third plenary session of the eighteenth also explicitly put forward to raise the proportion of direct tax to improve the tax system. Democracy is one of the important symbols of a modern state and an important part of China’s socialist core values. We always commit to promote the democratization process. However, our efforts does not receive a great certain of recognition.This article mainly adopts the methods of literature analysis, normative analysis and empirical analysis. First of all, through the theoretical analysis, we linked the two hot issues of the tax structure and democracy. On the basis of summarizing the predecessors’ research results, it is concluded that different tax system structures can be used as boosters of democratization. That is to say, in theory, the increasing proportion of direct tax can promote the democratization process. Then through the empirical analysis, I used the data of 32 OECD member countries as the sample to study the relationship between tax structure effects and democracy. This can be divided into three steps: firstly, selecting appropriate democratic measurement index, the ratio of the direct taxation and indirect taxation, and relevant control variables to set up a basic panel model. Secondly, making a phased regression to further explore whether there is a nonlinear relationship of tax structure and democracy. Thirdly, using the panel Var model impulse response graph to further study the relationship between the tax structure and democracy. But the empirical results show that the tax structure cannot promote the democratization process, which does not agree with the conclusion of theoretical analysis. The democratization process, in turn, has a certain degree of positive influence on tax structure. So the following part tries to find out the obstacle factors from three aspects: individual democracy consciousness, supervision power and social governance mechanism. Ultimately we put forward some enlightenments to improve our tax structure reform and corresponding policy system and so on.The main innovations and contributions of the article: firstly, the breakthrough of research contents. Recent researches about the relationship between tax structure and democratization usually focus on theoretical elaboration. In this article I use the empirical analysis to confirm whether tax structure has an impact on democracy. Secondly, the innovation of research methods. Using a Panel VAR model to study the interactive relationship of democracy, tax structure, economic development level. Finally, the democracy indicator I chose. There are many democracy indexes such as freedom house, polity VI projects. I use the Unified Democracy Scores index, which developed by professor James and his students.