Research On Tax Issues Based On Improved Barro Model

While taxation promotes the rapid development of the economy,it will cause certain distortions in economic relations,resulting in a loss of economic efficiency.Therefore,the government should try to reduce the distortion costs caused by taxation to the economy when solving the problem of fiscal expenditure financing.Based on Barro's tax smoothing theory,this paper mainly uses optimal control theory and stochastic analysis related knowledge to study taxation issues with minimal distortion costs.The main research contents and results are as follows:Firstly,it studies the optimal taxation model under discrete circumstances proposed by Barro in 1979.Considering the random influencing factors of the economic system,the optimization is obtained through the principle of dynamic programming under the assumptions that the government's intertemporal budget constraints are met.The Bellman equation of the problem converts the optimization problem into the problem of solving the difference equations,thereby obtaining the stochastic optimal taxation strategy in the discrete case.Further considering the actual effects of economic variables,the taxation model is improved from the two levels of the central government and local governments,and an optimal taxation strategy more suitable for reality was obtained.The fiscal expenditure and its lagging items are determined.Secondly,it extends the model to a continuous situation and establish a continuous stochastic taxation model.Under some assumptions,stochastic differential equations and related knowledge of dynamic programming are used to solve the simplified model,and the optimal taxation strategy under the continuous situation is obtained.Finally,according to the relevant fiscal data provided by the Ministry of Finance,an empirical analysis of the applicability of the Barro's tax smoothing theory in China and the optimal tax strategy under discrete circumstances is carried out.The empirical results show that the Barro's tax smoothing theory is applicable to China taxation situation,and the optimal tax strategy in the discrete case can be determined by the current fiscal expenditure and its seven lagging periods.