Low Taxation Undermines Economic Growth

LI Yong

 
Editorial note:

Whether China’s current income tax rate for foreign funded enterprises is appropriate has been a hot issue of debate among academics. The author points out that China’s foreign tax rate is low compared with that of other countries and, on the basis of calculations carried out in the course of this article, the balanced tax rate should range between 18.7% and 20.4%. The author has also analyzed the negative impact of an inappropriately low tax rate upon the macro-economy and reached the conclusion that, given the increasingly serious overheating of China’s macro-economy and investment, China’s tax rate should be increased.

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