Increasing the proportion of direct tax is an important way to optimize China's tax structure and improve income distribution, but it may also affect economic growth and social welfare. When the consumption tax rate is reduced, if longrun tax revenue remains unchanged, then wage income tax or capital income tax needs to be increased. In both case, capital accumulation and aggregate production will be reduced. In the long run, increasing the proportion of direct tax will reduce consumer's welfare, but some generations may benefit in the short run. The negative effects on economic growth and welfare is larger when the wage income tax rate is increased.
刘盼 罗楚亮. 税收结构改变的长期影响与转型特征[J]. 浙江工商大学学报, 2021, 35(1): 98-110.
LIU Pan LUO Chuliang. The Long-run and Short-run Effects of Tax Structure Reform. Journal of Zhejing Gongshang University, 2021, 35(1): 98-110.