Real Estate Tax Reform in China: Taxation Scheme and Effect Assessment

This article conducts a study on Chinese real estate tax levy mechanism characterized by "property tax" attributes on the foundation of "benefit tax" properties. Utilizing China Household Finance Survey data from 2019, the article estimates the tax-paying ability of various provinces under workable tax rates and devises six distinct real estate tax relief schemes. By comparing the distribution of tax burdens and Suit indices, it finds that the "per capita value + mortgage exemption" strategy yields the most robust progressivity and the most favorable outcome in terms of income adjustment. Building on the "per capita value + mortgage exemption" model, three real estate tax redistribution schemes are fashioned. The investigation into the repercussions of the real estate tax on overall family welfare through the Atkinson Social Welfare Function reveals that the "per capita value + mortgage exemption" relief scheme, in conjunction with the "subsidies for households with underage children" redistribution strategy, represents the most methodologically sound combination for the real estate tax enforcement at this time.