Local State Capacity and Uneven Taxation across Industrial Firms

Linke Hou, Zhikuo Liu, Qi Zhang and Xiaolu Zhao

China & World Economy, 2024, vol. 32, issue 3, 191-214

Abstract: In this research we investigate the association between local state capacity (LSC) and effective tax burdens (ETBs) on industrial firms within counties between 1998 and 2013. The LSC measures a state's capacity for policy implementation and specifically its ability to acquire low‐cost agricultural land for nonagricultural (industrial or commercial) purposes. Based on China's government‐led development experience since the 1990s, we draw on two unique household survey datasets to capture LSC at county level. We find robust evidence that greater LSC was associated with much lower ETBs on large industrial firms. This taxation pattern implies local government's primary reliance on larger manufacturing firms, while the ETBs for small‐and‐medium enterprises are not as prominently addressed. This research highlights that LSC can affect both the amount of revenue a local government can generate and the methods it uses to collect these revenues.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/cwe.12536

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:chinae:v:32:y:2024:i:3:p:191-214

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1671-2234

Access Statistics for this article

China & World Economy is currently edited by Yongding Yu

More articles in China & World Economy from Institute of World Economics and Politics, Chinese Academy of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().