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THE HETEROGENEOUS TAX BURDEN: EVIDENCE FROM FIRM-LEVEL DATA IN CHINA

Center for Research of Private Economy and College of Economics, Zhejiang University, 38 Zheda Road, Hangzhou, Zhejiang Province 310027, P. R. China

E-mail Address: jianliangye@zju.edu.cn

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XIAOHAN GUO

College of Economics, Zhejiang University, 38 Zheda Road, Hangzhou, Zhejiang Province 310027, P. R. China

E-mail Address: guoxiaoyjy@126.com

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DEMING LUO

Center for Research of Private Economy and College of Economics, Zhejiang University, 38 Zheda Road, Hangzhou, Zhejiang Province 310027, P. R. China

E-mail Address: luo106857@zju.edu.cn

Corresponding author.

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, and

XIANGRONG JIN

Center for Research of Private Economy and College of Economics, Zhejiang University, 38 Zheda Road, Hangzhou, Zhejiang Province 310027, P. R. China

E-mail Address: jinxiangrong@sina.com

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https://doi.org/10.1142/S0217590817420073Cited by:3 (Source: Crossref)

This article is part of the issue:

Special Issue on Changing Public Finance System: China's Fiscal Reform Towards a Sustainable Economic Development; Guest Editors: Zhikai Wang, Zhejiang University, China and Jinchuan Shi, Zhejiang University, China

Abstract

Firms’ behaviors are not only affected by their taxation burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of tax burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s tax burden in three ways, the value-added tax (VAT) burden, the corporate income tax (CIT) burden, and the total tax burden. By using a Hausman–Taylor estimation, we find: (1) The CIT burden is positively correlated to the size, while other two tax burdens are not; (2) Both the VAT burden and the total tax burden of SOEs are significantly heavier than those of non-SOEs, while the CIT burden shows the exactly opposite effect; (3) Exporters have a remarkably lower tax burden than non-exporters for all three tax burden measures; and (4) The western region and particularly the central region have lighter tax burden than the eastern region for all three tax burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural tax reduction and the structural fiscal reform in China.

Keywords:

JEL Classification: H11, H20, H32

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