Tax Contribution and Income Gap between Urban and Rural Areas in China

Yichao Yu^*

School of Economics, Jinan University, Guangzhou, China.

DOI: 10.4236/jss.2015.311023                

Abstract

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.

Keywords

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

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Deng, Z.J. (2001) Concentrating Financial Resources and Strengthening Fiscal Functions: The Core of President Jiang Zemin’s Theory of Financing. Journal Xiamen University (Arts & Social Sciences), 11, 5-9.
[2]	Gao, P.Y. (2006) Establish Tax System about Adjusting the Gap Between Rich and Poor. Economy, 12, 50.
[3]	Jia, K. (2008) Theory of Residents’ Income Distribution—Based on Classification Stratification Adjustment of Rational Policy. Finance Research, 2, 2-5.
[4]	Liu, H. (2012) Tax Structure and Income Inequality: Analysis based on World Bank WDI Data. Chinese Soft Science, 7, 179-185.
[5]	Shi, Z.Y. (2014) The Effects of Standardized Tax Rates, Average Tax Rates, and the Distribution of Income on Personal Income Tax Progressiveness. The Theory and Practice of Finance and Economics, 35, 70-74.
[6]	Yue, X.M. (2014) Economic Development, Tax Adjustment and Chinese Urban Household Income Disparity. Journal of Hebei University of Economics and Business, 35, 66-72.
[7]	Wan, Y. (2012) An Empirical Analysis of China’s Income-Distribution Effects of Turnover Tax. Contemporary Fi- nance & Economics, 7, 21-30.
[8]	Liu, Q.Z. (2011) Income Inequality and Redistribution of Individual Income Tax. Journal of Shanxi Finance and Economics University, 11, 1-9.
[9]	Yi, L. and Nie, H.F. (2004) Analysis of Indirect Tax Burden’s Influence on Income Distribution. Journal of Economic Studies, 5, 21-29.
[10]	Hu, S.W. (2006) Taxation Adjustment on Structure, Equity and Harmony. Journal of Finance and Economy, 10, 6-11.
[11]	Ouyang, H.S. and Xia, Y.F. (2011) Empirical Analysis of Personal Income Tax the Micro Tax Burden. Journal of Audit and Economic Studies, 26, 104-112.
[12]	Chen, J.D. and Xia, Z.B. (2011) The Secondary Distribution Effect on the Regulation of Urban Residents Income Gap Analysis—Based on the Urban Household Survey Data in Anhui Province from 2007 to 2010. Journal of Economic Theory and Economic Management, 9, 87-92.
[13]	The National Bureau of Statistics (2000-2014) China Statistical Yearbook. http://www.stats.gov.cn/tjsj/ndsj/
[14]	The State Administration of Taxation (2000-2014) Chinese Tax Yearbook. http://tongji.cnki.net/Kns55/Navi/HomePage.aspx?id=N2015050184&name=YZGRE&floor=1