A Study On The Non-Keynesian Effect Of Tax Policy On Household Consumption

In recent years,China's economic growth has slowed down.Among the three driving forces of the economy,exports are affected by trade wars,and the investment-driven economic growth model has come to an end.Only by boosting domestic consumption can we maintain steady and sustained economic growth.China has become a middle-income country.To avoid the "middle-income trap",we must accelerate the transformation of economic development mode,and the most important of which is to expand domestic demand.Although the government has implemented a series of tax policies in recent years to promote household consumption,the policy effect is not ideal,and the non-keynesian effect of tax policies is one of the factors.The discretionary mechanism of tax revenue itself may not work in accordance with the traditional keynesian theory,and the non-keynesian effect of tax policy deviates the policy effect from its original intention.The government should recognize the impact of non-keynesian effect of tax policies.This paper studies the impact of non-keynesian effect of tax policies on household consumption in China,hoping to put forward some suggestions on expanding household consumption and improving the effectiveness of tax policies.This paper studies the non-keynesian effect of tax policy on household consumption,and tests its influence and existence on household consumption.At the beginning,it introduces some problems existing in the current consumption status of Chinese residents,and then presents the significance of the topic from the three ways that tax policies affect the consumption of residents.Then in order to find the research space,this paper sorted out and reviewed the domestic and foreign literatures from the two aspects of the evidence of non-keynesian effect of tax policy and the main causes of non-keynesian effect of tax policy.After that,the theoretical part consists of three parts: the first part introduces the defects of Keynesian theory and two major theories of non-keynesian effects,namely keynesian policy invalidation theory and ricardo's equivalence theory.Keynesian policy invalidation theory holds that the government cannot predict economic fluctuations,so the policies adopted are ineffective and will in turn interfere with the self-regulation of the market.According to ricardo's equivalence theory,consumers have an unlimited life span,and tax revenue does not affect consumers' consumption in the current period.The tax multiplier is 0.The second part introduces the impact of tax on consumption throughthree ways: resident income,fiscal expenditure,commodity and service price.The third part introduces the mechanism of non-keynesian effect of tax policy from the perspectives of expected effect,substitution effect and labor market.Finally,this paper uses threshold regression model and takes per capita fiscal expenditure as the threshold variable to test whether there is a non-keynesian effect of China's turnover tax and income tax policies on household consumption.Threshold regression model was Hansen's first empirical model for nonlinear relationship in 1999.It overcomes the disadvantage that traditional linear regression has only one linear relation.In the study of the nonlinear relationship between variables,the traditional approach is for researchers to determine the threshold value subjectively and divide the sample into multiple intervals.In this way,neither parameter estimation of the threshold value nor statistical test is conducted,and the result is not reliable.In the threshold regression model,different intervals are no longer divided subjectively,but the threshold values are estimated and tested by strict statistical inference methods.The principle is to find the threshold value based on the principle of “minimizing the sum of squares of residuals” and divide the sample into multiple intervals by the threshold value.Regression is carried out in each interval.If different regression coefficients appear in different intervals,it indicates that this tax has a non-keynesian effect on household consumption.Through empirical analysis,we find that the turnover tax shows non-keynesian effect in regions with high per capita fiscal expenditure,and the consumption of residents increases with the increase of the tax burden rate of the turnover tax.In regions with low per capita government expenditure,the turnover tax still shows the keynesian effect and inhibits the consumption of residents.Income tax presents keynesian effect in all regions,which has an inhibitory effect on household consumption,and the inhibitory effect is stronger in low-income regions.Based on this,this paper puts forward policy suggestions from three aspects: first,the government should pay attention to non-keynesian effect,and the government should realize the existence of non-keynesian effect,and rationally use tax policies in different periods to strengthen the effectiveness of policies;The second is to speed up the establishment of income tax structure;The third is to persevere in the tax reduction policy.In general,China's tax burden still has a negative impact on household consumption,and reasonable tax reduction is helpful to stimulating the increase of household consumption.