Abstract
Using household-level data, we estimate the effective-income-tax function for China, that is, a nonlinear relationship between income and effective income tax rates. The estimated function can be used in a wide range of applied works in macroeconomics and public finance. In addition, using this function, we investigate the effects of tax exemption increases on properties of the personal income tax system. The main empirical result is that the effective-income-tax function becomes more progressive; however, the trend toward that was halted by tax exemption increases. Furthermore, variations in local progressivity indicate tax reforms had unequal impacts on the redistribution effects across income intervals. Furthermore, the tax reforms temporarily reduced horizontal inequality.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
