Research On The Macroeconomic Effect Of Tax Structure Optimization

Finance is the important pillar and foundation of governance and tax is the most important source of public revenue and the important safeguard to ensure the effective operation of the national economic system. Deepening the market economic reform need to establish the appropriate modern tax system. With the continuous improvement of the market economy system, tax system will inevitably undergo structural adjustment. The essence of the tax system is to optimize the tax structure. The tax structure adjustment of the world experiences from original direct taxes as the main body to indirect taxes as the main body, then to the modern direct taxes as the main body, and finally to the current direct and indirect taxes as dual body. Tax structure adjustment of mature market economies shows that tax structure mostly experiences sharp fluctuation and then tends to be stable, and each substantial tax structure adjustment is inextricably related with the prevailing economic system and the economic situation. Tax structure adjustment is constantly adapted to changes in the macroeconomic, and tax structure is constantly optimized to evolve forward.At present, China’s macroeconomic environment has undergone profound changes. From an international perspective, the world economy has changed from the rapid development before the international financial crisis to a deep transition period; from a domestic perspective, the economic development has changed from the rapid growth after the reform and opening up to the growth shifting period. In the new stage, to maintain economic stability and sustainable development, an important issue is to grasp the intensity of macroeconomic regulation and control policy. Since the international financial crisis, the world’s major economies have adopted expansionary macroeconomic policies to respond to short-term cyclical impact of the recession. Since monetary policy is difficult for structural economic adjustment directly, while fiscal expenditure policy, especially large-scale government investment generate long-term side effects to the economy, but tax policy can increase the supply of the economy itself, and achieves both goals of steady growth and economic structure adjustment, therefore supply management effect of tax policy need to be given special attention. Subject to the expenditure pressure and the difference of control objectives, tax policy usually follows the way of structural adjustment. It is essential to remain macro tax burden and financial pattern stable, and correspondingly implement structural tax reduction, and change sales taxes into value added taxes to optimize tax structure, and promote adjustment of consumption tax and other taxes to build local tax system. Considering the current tax system and tax structure optimization pattern, structural tax reduction should focus on the larger share of indirect taxes."Replacing the business tax with a value-added tax " as a breakthrough of structural tax reduction, will make the policymakers to reconsider a series of issues, such as the current economic structure, the existing tax structure, the local tax system, the financial relationship between the central and local and the pattern of tax administration. It not only involves the depth adjustment of tax pattern, but also determines the future direction of macroeconomic. By studying the relationship between tax structure and macroeconomic, this article make specific recommendations to optimize tax structure. This article includes the following sections:Chapter one is the introduction. This section describes the background and significance of the issues, the logical framework, main content and methods, as well as innovation and shortcomings of the article.Chapter two is the literature review. In both domestic and foreign perspectives, this section reviews the relationship between tax structure and economic stability, and that between tax structure and economic growth, as well as theoretical research and empirical research related to tax structure optimization.Chapter three is the theoretical analysis. This section focuses on the economic stability theory of tax policy, the economic growth theory of tax policy, and the tax structure optimization theory, as the theoretical basis for later analysis.Chapter four is the model building. To begin with, this section establishes the complex tax structure model including consumption tax, capital income tax and labor income tax in a dynamic stochastic general equilibrium model framework. Then this section calibrates the parameters of the model based on existing literature and Chinese actual data.Chapter five is the numerical simulation. This section carries out the impulse response and the numerical simulation based on theoretical models and parameters calibration, testing the model fitting degree on the real economy, and further investigates the macroeconomic variable volatility effects of different tax structures.Chapter six is the empirical analysis. This section further study the economic growth effects of the tax structure with the empirical method. The empirical analysis firstly take the consumption tax, capital income tax and labor income tax as explanatory variables, then introduces China’s actual tax structure, to take value-added tax, business tax, consumption tax, corporate income tax and personal income tax and other variables as explanatory variables for robustness analysis.Chapter seven is the policy recommendation. On the basis of the above analysis and combined with the current macroeconomic situation, this section proposes to implement structural tax reduction under stabilizing the tax burden, and to replace the business tax with a value-added tax to optimize tax structure, and to construct the local tax system in the framework of tax distribution system, and to pay attention to macro regulatory policy in view of supply management.