Study On The Impact Of Tax Reduction On Total Factor Productivity Of Enterprises

Under the new economic normal,the development of total factor productivity is regarded as the necessary way to realize the transformation of economic system.As the backbone of the national economy,the development of the manufacturing sector is of great concern.Among several government policy tools to regulate the economy,there is no doubt about the importance that taxation can play.Essentially,taxation is a means for the government to share the profits of enterprises,and the implementation of tax reduction means that the government subsidizes enterprises in disguise,and is more universal and sustainable than other forms of subsidies.So,whether the tax cut has a positive impact on the improvement of total factor production of enterprises and through what channels,these questions need to be explored.Therefore,this paper analyzes the impact and transmission mechanism of tax cuts on total factor productivity of enterprises with the help of empirical tools,and proposes suggestions to optimize the implementation of tax cuts to promote the long-term development of enterprises.The steps of this paper are divided into the following parts: firstly,we clarify the research direction,summarize the existing literature,and organize the literature related to tax reduction policy and total factor productivity as the basis for the subsequent research.Secondly,the theoretical analysis is conducted,and the five research hypotheses of this paper are proposed,and the current situation of tax reduction policies,mainly in terms of corporate income tax and VAT preferential policies,and total factor productivity in China is described.Again,the manufacturing listed enterprises in the small and medium-sized board and the gem board from 2012 to 2019 are selected as the sample,the LP method is used to measure the TFP of enterprises,the comprehensive corporate tax rate is used as the explanatory variable,the fixed effect is selected as the benchmark model,and the discussion is expanded to discuss the moderating effect of financing constraints in the role of tax reduction and the testing of different mechanism levels of enterprises from the perspective of R&D investment,fixed asset investment,and human capital.The heterogeneity effects of firm ownership,innovation intensity and location factors are also considered,and the heterogeneity tests are conducted from these three aspects.Finally,to ensure the robustness of the data results,the model is tested by replacing the proxy variables of enterprise TFP,tax reduction intensity and mechanism variables with indicators,shortening the sample time,lagging core explanatory variables and constructing instrumental variables.Through the model test results,this paper finds that: firstly,the implementation of tax cuts has a positive effect on the development of enterprise TFP overall,and the effect is more prominent among state-owned enterprises,enterprises in the eastern region,and enterprises with weaker innovation intensity;secondly,the financing constraint plays a negative moderating role in the effect of tax cuts,i.e.,among enterprises enjoying tax incentives,the higher the level of corporate financing The higher the level of tax constraint,the less obvious the driving effect of tax cut on enterprise TFP;third,the implementation of tax cut can increase the scale of enterprise R&D,fixed assets,and human capital investment,and then drive up enterprise total factor productivity.Meanwhile,among the three mechanism paths,enterprises most prefer to use the tax cut dividends to expand the scale of fixed assets,while the mechanism path of R&D investment has stronger sustainability.The theoretical analysis and empirical results of this paper are synthesized,and the following suggestions are made for the government to improve the tax reduction policy and promote the long-term development of enterprises: first,to continuously enhance the tax reduction and expand the policy dividend,and to take into account the heterogeneity of enterprises and appropriately adjust the balance of the policy;second,to accelerate the improvement of the financial system and optimize the financing environment to alleviate the dilemma of enterprise financing constraints;third,to focus on the guidance policy of innovation and improve the enthusiasm of enterprises to participate in R&D;fourth,improve the guidance of investment policies to improve the efficiency of enterprises;fifth,enterprises should reasonably deploy various resources to promote the improvement of total factor productivity.