The Impact Of China’s Effective Labour Tax Rate On The Scale Of Business Employment

In recent years,China’s employment situation is not optimistic,and in the micromarket the performance of enterprise is layoff.Therefore,in order to promote employment,we should clarify the impact of labor tax on the employment scale of enterprises,so as to play the role of macro-control of taxation.Existing literatures show that labor tax is negatively correlated with labor demand,in which individual tax and social security fee are negatively correlated with labor demand,and the effect of individual tax is not obvious.However,few scholars have explored the impact of effective tax rate on labor demand in the micro-market.Therefore,this paper takes labor-intensive manufacturing industry as the research subject,and constructs a benchmark model according to the data from 2008 to 2018,in which the explained variable is the growth rate of employment scale of enterprises and the explanatory variable is the effective tax rate of labor.The hypotheses to be tested in this paper are as follows: First,the effective labor tax rate has a negative impact on the employment scale of labor-intensive manufacturing industry.Second,the impact of individual tax on the employment scale of labor-intensive manufacturing industry is not significant.Third,the inclusion of social security in the overall planning has a negative impact on the employment scale of labor-intensive manufacturing industries.The main conclusions are as follows: First,the effective labor tax rate has a significant negative impact on the growth rate of employment scale at the level of 5%.For every unit reduction of the effective labor tax rate,the growth rate of employment scale will increase by 0.406 units.Second,among other variables,scale of production has a significantly positive effect on employment scale growth rate at 10% level,while economic development has a significantly positive effect on employment scale growth rate at 5% level,while other variables have no significant relationship with employment scale growth rate.Third,Individual tax has no significant impact on the growth rate of employment scale,while social insurance premium has a significant negative impact on the growth rate of employment scale at the level of 10%.Finally,this paper suggests: First,reduce the individual income tax burden and improve the personal income tax system,especially the six additional deductions;Second,reduce the burden of social security,and change the social security collection model to "low rate,wide fee base,strict collection and management".