Author(s)

Yichao Yu^*

School of Economics, Jinan University, Guangzhou, China.

This article analyses the relationship of tax contribution and income gap between urban and rural areas. First of all, we comb their relationship from theoretical knowledge. Secondly, we use 2000- 2014 panel data of 29 provinces and cities in our country (except Tibet) to establish the fixed effects model for analysis. Results show that the improvement of tax contribution will expand the income gap between urban and rural areas. This is due to that turnover tax contribution is the most important part in the tax contribution. From the structural analysis, improvement of turnover tax and income tax contribution are not conducive to narrow the income gap between urban and rural areas. The improvement of property tax contribution is conducive to narrow the income gap between urban and rural areas. Finally, from the empirical results, we can give the policy suggestion of structural tax cuts and others.

Income Gap between Urban and Rural Areas, Tax Contribution, Fixed Effects Model, Structural Tax Cuts

Yu, Y. (2015) Tax Contribution and Income Gap between Urban and Rural Areas in China. Open Journal of Social Sciences, 3, 171-196. doi: 10.4236/jss.2015.311023.