An Econometric Analysis on Tax, Tax Structure and Economic Growth in China

This paper makes a revision of Greiner model and based on which analyzes the relationship between aggregate tax burden in China and economic growth with panel analysis. The results show that the average tax burden in the western economic region is comparatively high and its negative effect on the economic growth is significant, while the aggregate tax burden in the central and western economic regions are lower than that of the eastern economic region and their effects on the economic growth are not significant. This paper also makes a cointegration analysis between tax structure and economic growth and the result shows that that tax on capital income significantly decreases growth rate per capita, and are unfavorable to economic growth, tax on labor income has no significant effect on economic growth, and tax on consumption has significantly increased growth rate per capita which is favorable to economic growth.