HU Huaiguo:The Regressivity of Tax Burden in Traditional Chinese Society: A Study Based on Pareto Distribution

Abstract  In this paper, a brief neoclassical model was built to explore the basic features of taxation structure in traditional Chinese society. The production and tax functions of representative households indicated the regressivity of taxation structure in traditional Chinese society. By assuming that lands of representative households obey Pareto distribution, the paper estimated Gini Coefficients of gross and net income of households, and theoretical reasoning and numerical simulation were conducted to analyze the effects of the change of parameters of taxation. The main conclusions of the paper are: First, as long as the tax burden for “adult men” or “households” were nonzero, the corresponding tax burdens must be regressive; second, taxation would enlarge the income gap regardless of various types of tax burdens, but taxation based on “adult men” or “households” had greater effects on Gini coefficients of net income; third, technological progress would reduce both tax regressivity and the income gaps.

Key words： Households    Regressive Taxation    Pareto Distribution    Gini Coefficients

Source: Finance & Trade Economics , No.9, 2014