Abstract:Based on a constructed theoretical model, this paper studies the operation of family planning policy in rural China during the post agricultural tax era. Within the current fiscal system, this paper finds fines for over births becomes rural government’s main fiscal revenue, and consequently rural government encourages people to give more births to increase its revenue. Therefore, the population control policy is losing its effectiveness. Through the model, the bargaining power among the fiscal system, rural residents, and rural government is the key to the birth control problem. When the fines for over birth become rural government’s main revenue source, the growth in number of rural births also increases rural government’s total utility, producing the co-existence of high-fines and high-births.