In the context of sluggish investment in China and the government’s ongoing tax reduction policies, this paper examines the impact of tax burdens on corporate investment using data from the World Bank’s 2012 China Enterprise Survey. The analysis is rooted in theoretical frameworks such as the tax revenue effect, which highlights how higher tax burdens reduce the funds available for corporate investment, and the substitution effect, which explains how firms might alter their investment strategies in response to changes in taxation. Through empirical analysis, the study finds that tax burdens significantly suppress corporate investment, particularly in real estate, a sector that often requires substantial long-term financial commitments. These results suggest that high taxes can deter companies from making large investments, thus slowing overall economic growth. In light of these findings, the paper argues that further tax reduction policies could stimulate corporate investment by alleviating financial pressures, encouraging companies to invest in growth-driven activities. The study contributes to the ongoing debate on fiscal policy by providing empirical evidence that supports the government’s efforts to use tax cuts as a tool to stimulate economic development and enhance the overall investment climate in China.