LI Chungen, XU Jianbin：Tax Structure, Tax Price and Demand for Redistribution ——An Empirical Study Based on Chinese Data

Abstract：Based on the theory of fiscal illusion and using city-level and individual-level data, this paper investigates the relationship between tax structure and demand for redistribution empirically.The empirical results show that tax structure and demand for redistribution are significantly correlated, the higher the proportion of the indirect tax in one city is, the stronger the demand for redistribution of residents will be.Further marginal effect estimation shows that the marginal impact of the tax structure on the demand for redistribution of residents is roughly the same as per capita GDP, but is significantly greater than the individual income.The results suggest that optimizing the current tax structure is an important direction of tax reform in China so as to alleviate the serious fiscal illusion in China.

Key words： Demand for Redistribution    Tax Structure    Tax Price

source:Finance & Trade Economics ,No.11,2015