The Research Of Effective Tax Rate Change Impact On Labor Share

According to the researches about labor share conducted by some learners at home or broad,some of which reached a consensus on the decline of labor share.However,as for the reasons of its decline,different learners hold various standpoints.Hence,it is valuable and meaningful to rethink this topic.Taking into account the macro average tax burden of labor,capital and consumption,and paying much attention to labor share deducted tax,this article is aimed at exploring how they make impacts on it by means of establishing a general equilibrium model,which is comprised of a family,a representative enterprise and the government.Additionally,based on the results derived from theoretical model and panel data,at our disposal,of 31 provinces and autonomous regions in China from 2004 to 2016,it is not hard to set an empirical model to make sure whether the macro average tax rate of labor,capital consumption can influence the labor share deducted tax,and how they do it.Moreover,the empirical test demonstrates and coincides with the basic inference via theoretical analysis.Finally,we can not only make a summary about computing results and a group of cor-relativity among the variables gotten from panel data,but safely draw a number of conclusions made from theoretical and empirical model as following that:1.According to the calculation of labor income share,with the beginning of 2008,2009 and 2011 as the time node,it can be roughly divided into four stages:decline,rebound,decline and stability.There are different policy changes at these four time points.In addition,the effective tax rates of labor,capital and consumption also show obvious trend changes in the corresponding time interval.2.For one thing,labor share is positively correlated with its output elasticity,and negatively correlated with both the average effective tax burden of labor and proportion of the tax income accounting for output.For another,likewise,the capital share is positively correlated with its output elasticity,and negatively correlated with both the average effective tax burden of capital factor income and the proportion of the tax income accounting for output.3.Having considered plentiful econometrical factors such as the contemporaneity correlation,inter-group heteroscedasticity and intra-provincial autocorrelation,empirical test shows that,if the average effective tax rate of labor and consumption expenditure respectively ascend by one unit,they will cause that labor income share respectively decreases by 0.986 units and 0.307 units.On the contrary,if the average effective tax rate of capital jumps upon by one unit,the labor share will increase by 0.212 units.More importantly,these results of research are still believable even having a robust test,in which substituting labor with capital share as explained variable,and keeping other independent variables unchanged just like same in regression to labor share before.Therefore,by virtue of a comprehensive analysis from above,if the government plans to enhance the labor share,it is conducive to give some weights to the following tax policy suggestions.Firstly,three kind of macro effective tax burden all have significant effect on labor share.But among of them,their effectiveness is different.average effective tax rate of labor is the most effective,and of capital is less than it,of consumption is the least.Secondly,as for the scope of selection about tax policy,average effective tax rate of capital is widest,of consumption is the second,of labor is the last.Finally,when deciding to adopt which kind of policy,we need to strike a balance between effectiveness and the scope of selection.