Professor Wang Zengwen, deputy director of the Social Security Research Center of Wuhan University, and his doctoral students Guan Liding and Hu Guoheng published a paper entitled "Structural Analysis of the Equilibrium between the Mechanism of Economic Growth Efficiency and the Mechanism of Social Welfare Sharing: The Optimal Tax Structure of Capital Taxation and Labor Taxation" in the 6th issue of the CSSCI journal Journal of Fiscal Research in 2021.

【author】Wang Zengwen，Guan Liding，Hu Guoheng

【Published Journal】《财政研究》

【Journal level】CSSCI

【Publication Time】2021（06）

【Abstract】Taxation and social security have become important mechanisms for regulating income distribution by realizing the two-way allocation of social resources between individuals or enterprises and the government or public sector. While the efficiency of economic growth is improved, is there an optimal structure of tax and social security revenue and expenditure to reduce the situation of gradually widening income gap in the process? Based on this, this paper adopts the basic analysis framework of the two-period Intergenerational Overlap (OLG) model, takes the consumption and productivity of government public expenditure as the starting point, and takes the optimal tax structure of capital taxation and labor taxation as the combination point, and analyzes the equilibrium between the economic growth efficiency mechanism and the social welfare sharing mechanism. In this paper, a theoretical deductive model is established, and an empirical test is carried out based on the provincial panel data from 2011 to 2017 in China. The empirical results show that if the goal is social welfare equity, the optimal taxation structure should be biased towards taxing the capital of producers, and the optimal taxation rate is the elasticity of public expenditure. If the goal is to maximize the efficiency of economic growth, the optimal taxation structure is still biased towards taxing the capital of the producer, and the optimal taxation rate is the output elasticity of the capital level owned by the producer. From the perspective of social welfare, if the social individual optimizes social welfare and maximizes its utility in the form of consumption, the optimal tax structure is determined by the endogenous parameters in the OLG model. Based on the results of the dynamic simulation test, taxation of capital should be the best choice.

【Keywords】efficiency mechanism; social welfare-sharing mechanisms; optimal tax regime; taxation of capital; taxation of Labor