*2.2. Empirical Hypothesis*

According to the theoretical analysis in Section 2.1, we know that when the government has short-term GDP incentives, he intervenes differently in automobile industries. In order to provide more capital for the entire economy to drive more output of all industries because of the multiplier effect of the capital in macroeconomics, the government will support the development of the automobile manufacturing sector with more subsidies, while the subsidies implemented in the automobile maintenance industry will be relatively less. The differential subsidies can reduce consumption and promote capital accumulation, thus, contribute to GDP growth. To prove the mechanism of our theoretical model and conclusion, we will give some empirical evidence about how the government's short term GDP incentive can affect the biased government intervention between the firms of automobile manufacture sector and firms of automobile maintenance sector. Furthermore, we will find the appropriate proxies of government intervention and government's short-term GDP incentives.

As for the measure of government intervention, the government subsidy is a kind of government intervention, and it is usually carried out in the form of preferential treatment or hidden subsidies for firms, which cannot be seen directly, however, the preferential treatment can be reflected in the degree of tax avoidance of firms. Although the tax collection is stipulated by the law of tax, the tax law also allows the government to implement tax reduction and tax preference accordingly, which induced that the actual tax rates of enterprises may not the actual tax rate ruled by the tax law. In addition, the government can use different taxation intensity; thus, the degrees of tax evasion of different enterprises are different. Thus, when the government has more GDP incentive, more preferential treatment will be given to automobile manufacturing enterprises, and the tax avoidance of these enterprises should be larger. So we use the tax avoidance of the firm to represent the

degree of government intervention, and the larger tax avoidance, the large degree of government intervention. Since the government intervention is biased to automobile manufacturing enterprises and the biased gap increases with the government's GDP incentives, we have the following empirical hypothesis below.

**Hypothesis 1.** *The higher government's GDP incentives will increase the gap of tax avoidance between the automobile manufacturing enterprises and automobile maintenance enterprises.*


**Table 1.** Notation list.
