What Affects the Tax Rate?

Tax rate adjustment refers to the adjustment implemented by adopting different tax rates for different industries, different products, different enterprises, different tax items, and different taxpayers. The tax rate is the central link of the tax system and the core means of tax regulation. The level of tax rates directly determines the tax burden of taxpayers and reflects the depth of tax regulation. Different tax rates have different degrees of adjustment. Adopting a proportional tax rate makes adjustments rigid; adopting a progressive tax rate makes adjustments flexible; adopting a fixed tax rate makes adjustments direct. According to national policy requirements, different tax rates for different industries, sectors, and products can effectively adjust the structure of industries, sectors, and products, and promote the coordinated and stable development of the national economy. However, it is necessary to adopt other specific tax adjustment methods and coordinate with other economic levers at the same time to achieve the intended purpose.

Tax rate adjustment

Right!

Tax rate adjustment refers to the adjustment implemented by adopting different tax rates for different industries, different products, different enterprises, different tax items, and different taxpayers. The tax rate is the central link of the tax system and the core means of tax regulation. The level of tax rates directly determines the tax burden of taxpayers and reflects the depth of tax regulation. Different tax rates have different degrees of adjustment. Adopting a proportional tax rate makes adjustments rigid; adopting a progressive tax rate makes adjustments flexible; adopting a fixed tax rate makes adjustments direct. According to national policy requirements, different tax rates for different industries, sectors, and products can effectively adjust the structure of industries, sectors, and products, and promote the coordinated and stable development of the national economy. However, it is necessary to adopt other specific tax adjustment methods and coordinate with other economic levers at the same time to achieve the intended purpose.

Chinese name

Tax rate adjustment

Foreign name

Tax adjustment

Nature

Economic terms

Function

Promote the coordinated and stable development of the national economy

The tax rate is the ratio between the amount of tax and the amount of taxable objects. It is the scale of taxation and reflects the depth of taxation. The tax rate is the core of the tax system and mainly solves the problem of how much tax is levied. The determination of the tax rate directly affects the development of a certain sector or industry. From the perspective of the macro-control of the tax rate, the adjustment of the tax rate mainly depends on two issues: the first is the determination of the overall level of the national tax rate, and the second is the determination of the tax rate form. ^[1]

The level of the tax rate and the severity of the tax burden directly affect the efficiency of the country's economic operation, and then affect tax revenue. How to determine the level of a country's tax rate, Arthur Laffer, an American supply school economist, proposed the famous "Laffer curve" principle to define the optimal tax rate. The basic point is: within a certain limit, tax revenue will increase with the increase of the tax rate, because the tax source will not decrease proportionally due to the increase of tax; when the tax rate increases beyond a certain limit, the tax rate continues to increase, then the tax revenue Not only cannot it increase, but it will decrease as the tax rate increases.

The "Laffer curve" principle had a huge impact on the tax system reforms of western market economy countries represented by the United States in the 1980s, and became the theoretical basis for promoting large-scale tax reduction policies.

There are two main choices in determining the form of tax rates: proportional tax rates and progressive tax rates. The proportional tax rate is more conducive to the improvement of economic benefits, while the progressive tax rate is more conducive to the fair distribution of income. Therefore, the choice of proportional tax rate and progressive tax rate is essentially an efficient and fair choice.

Generally speaking, the commodity tax is more suitable for the proportional tax rate, while the income tax is more suitable for the progressive tax rate. As far as the overall layout of the tax rate is concerned, the focus should be selected according to the needs of the objective economic situation. At present, more and more economists believe that in order to improve the economic benefits of society, the progressiveness of the tax system should be reduced. In dealing with the issues of efficiency and fairness, China has put forward the principle of "efficiency first, giving consideration to fairness", which has a guiding role in strengthening macroeconomic regulation and control of the national economy.