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The distributional impact of income tax in Canada and China: 1997-2005

Author

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  • Horn-Chern Lin
  • Tao Zeng

Abstract

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.

Suggested 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, Emerald Group Publishing, vol. 3(2), pages 132-145, June.
  • Handle: RePEc:eme:ceftpp:v:3:y:2010:i:2:p:132-145
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    References listed on IDEAS

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    1. Mr. Ke-young Chu & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Income Distribution and Tax and Government Social Spending Policies in Developing Countries," IMF Working Papers 2000/062, International Monetary Fund.
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    Cited by:

    1. Girish K. Nair & Lewlyn Lester Raj Rodrigues, 2013. "Dynamics of Financial System: A System Dynamics Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 14-26.

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