Frontier Advanced Seminar Series in Economics No. 19
The Survival and Growth of SMEs: Evidence from Corporate Income Tax Cuts in China
Speaker: Prof. Xiaochen XIE (Renmin University of China)
Host: Prof. Anzhou ZHANG (Liaoning University)
Introducer: Prof. Xiangjun MA (Liaoning University)
Time: April 7, 2023 (Friday), 14:00-15:30 (UTC +08:00)
Venue: Tencent Meeting (Meeting ID: 3007551 6895)
Language: Mandarin/English
Abstract：We study China's notch-based corporate income tax cuts aiming to support the growth of SMEs between 2014 and 2018. Empirical evidence applied to administrative tax data shows that the notch-based tax cuts simultaneously (1) increase the number of SMEs (2) motivate the SMEs to produce more (3) induce above-notch firms to reduce their production. Motivated by empirical evidence, we build a structural model to capture firms' production behaviors, highlighting how tax policy affects the firms' output. In the counterfactual analysis, we analyze the aggregate impact of existing policies on economic output and the potential expansion of SMEs. Lastly, we compare different tax policies and find that kink-based tax cuts and subsidies could be many times more efficient than notch-based policies in reducing fiscal expenditure.
Speaker Introduction: Xiaochen XIE is an Assistant Professor from the Department of Finance, School of Finance, Renmin University of China. He is an Outstanding Young Scholar of Renmin University of China. He graduated from Peking University in 2013 with a Bachelor's degree in finance from Guanghua School of Management and a Bachelor's degree in statistics from the School of Mathematical Sciences. He received a Master's degree in economics from University of Wisconsin-Madison in 2014. He obtained his Ph.D. degree in economics from Pennsylvania State University in 2021. His thesis advisor is Prof. Jonathan Eaton, an academician of the American Academy of Arts and Sciences. His current primary research areas are Public Finance, International Trade, Industrial Organization, and Urban and Regional Economics. His main research interest is to evaluate the impact of government policies and public programs on corporate behavior and macroeconomics through empirical regression analysis and structural model simulations. Several working papers of his have been submitted to first-tier international journals.
