Online from: 2008
Subject Area: Economics
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|Title:||The distributional impact of income tax in Canada and China: 1997-2005|
|Author(s):||Horn-Chern Lin, (Strategic Research Unit, Office of the Budget and Taxation, Ontario Ministry of Finance, Toronto, Canada), Tao Zeng, (School of Business and Economics, Wilfrid Laurier University, Waterloo, Canada)|
|Citation:||Horn-Chern Lin, Tao Zeng, (2010) "The distributional impact of income tax in Canada and China: 1997-2005", Journal of Chinese Economic and Foreign Trade Studies, Vol. 3 Iss: 2, pp.132 - 145|
|Keywords:||Canada, China, Income tax, National economy|
|Article type:||Research paper|
|DOI:||10.1108/17544401011052276 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors thank two anonymous reviewers for their insightful comments and suggestions. The second author acknowledges that financial support for this research was received from CA/Laurier University Centre.|
Purpose – The purpose of this paper is to examine the distributional impact of personal income tax in Canada and China over the most recent decade.
Design/methodology/approach – The Urban Household Survey in China and the Canadian Socio-Economic Information Management System data are employed.
Findings – It was found that, in both Canada and China, the personal income taxes are progressive, that is, tax payments and average tax rates are increasing in the income share of high-income taxpayers.
Research limitations/implications – This paper does not explore the connection between tax progressivity differences and social, political, and cultural differences in the two countries.
Practical implications – This paper is of interest to policy makers, economists, and academics, who seek to design an income tax system which can mitigate income inequity efficiently. Given that income taxes have changed in China in recent years, future studies should be conducted to compare the distributional impacts of the new tax system against those of the old tax system.
Originality/value – This is the first study of distributional impact of income tax in China. This is also the first study to compare tax distribution between China and a developed country.
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