Research On Income Redistribution Effect Of China's Tax

Since reform and opening up,China has carried out the development strategy of "taking economic construction as the center",and achieved the rapid economic and social development,as well as greater improvement of production.However,in the process of rapid economic and social development,income inequality has been accumulated,and the gap between the rich and the poor has been widened,which means a acid test to the sustainable economic development and construction of harmonious society.Although the GINI index,which is usually used to measure the income gap of Chinese residents,has increased from 0.479 in the year of 2003 to 0.491 in the year of 2008,then reduced to 0.462 in the year of 2015,the level of the income gap of Chinese residents is much higher than the safe standard of 0.4.The problem of income gap will persist in the future.In recent years,China's economy has entered a new economic norm,and faces with the challenge of the middle income trap.Under the background of the new economic norm,solving the problem of the unfair income distribution is of great importance to across the middle income trap and to build a Xiaokang society in all respects.The reform on the system of income distribution will contribute to ease the income gap,which is the stabilizer of social harmonious.In the fact,China has pay high attention to the problem of income distribution,which gives priority to efficiency with due consideration to fairness in the early years and handles good relationship of efficiency and fairness in the primary distribution and redistribution and gives priority to fairness in the redistribution.In recent years,in order to deepen the reform on income distribution and maintain social fairness,Chinese has clearly proposed to improve the regulatory mechanism of tax,social security and transfer payment in redistribution,increase the regulation of tax.Giving full play to the role of tax regulation on income redistribution is important to the health and sustainable development of Chinese economic and society.Through the theoretical analysis and empirical test,this article investigates the impact and mechanism of tax regulation,and lays emphasis on the mechanism of individual income tax,indirect taxes and extension of the value added tax(VAT).This article is divided into seven chapters,and its primary coverage is as follow.Chapter ?:Introduction.This chapter sets out the background and meaning in detail firstly,then we makes literature review from four dimensions of the income distribution,individual income tax,indirect taxes and tax reform.Afterwards,this chapter puts forward the thinking,contents and methods of the research.Finally,the innovation and deficiency of the research are proposed.Chapter ? :Theoretical framework on the tax regulation of income distribution of residents.Firstly,we make a discussion on the theory evolution.Secondly,we analyze the mechanism of tax regulation on income distribution of residents,which includes the implementation,usage,accumulation and transfer of taxation.Finally,we discuss the limits of tax regulation of income distribution on residents.Chapter ? :Research on the methods of tax regulation on progressivity and income redistribution.Firstly,we analyze the relationship between tax progressivity and redistribution effect,and we discuss the measurement of tax progressivity,which can be divided into local progressivity and the overall progressivity,and we also discuss two important properties of tax progressivity.Secondly,we analyze the measurement of income redistribution effect,and we discuss the concept of the horizontal equity,and we propose the decomposition methods of income redistribution,which are based on the explanation of classic horizontal equity and the income reordering of horizontal equity.Chapter ?:Redistribution effect of individual income taxation.We analyze the redistribution effect of individual income taxation from sub-item income tax,income tax on wages and salary,industry income tax.Firstly,by fitting the income distribution of urban residents between 2002 and 2011,we analyze the income redistribution effect of sub-item income tax.The results show that the redistribution effect of individual income tax almost depends on the income tax on wages and salary.Secondly,this article proposes static and dynamic decomposition methods of the MT redistribution effect index.The results show that,the change of income distribution promotes the redistribution effect of income tax on wages and salary.We also find that the increase of expense deduction standard and the change of tax rate structure weaken the redistribution effect of income tax on wages and salary and increase the progressivity of income tax on wages and salary.The inequality before tax and the taxation effect weaken the equalization effect of the income tax on wages and salary,while the distribution effect strengthens the equalization effect of the income tax on wages and salary.After all,the all previous reform of the income tax on wages and salary weaken its effect on income redistribution.Finally,we use the S-GINI index to investigate the income redistribution of tax of industry individual income,the results show that the income tax has a positive regulation on industry income gap and the degree of regulation first rises and then falls,and the state of income distribution of low income group is worsen.While the vertical equity first falls and then rises,which has a large value and contributes a lot to the MT redistribution effect.Chapter ?:Research on the redistribution effect of indirect taxes.Firstly,we research the tax burden on urban residents,and the results show that the added-value tax has a negative effect on income distribution of residents,which is due to the tax burden of low-tax-rate added-value tax.We also find that the progressive direction of excise tax is not clear.while business tax is propitious to income distribution with a limit impact.Secondly,by using six methods of progressivity and the decomposition method of K progressivity,this article finds that indirect tax is regressive and the contribution of VAT to the regression of indirect tax is highest.Finally,by using S-GINI index,general entropy index,this article measures the redistribution effect of indirect tax.The result shows that Chinese pre-tax income inequality fist rises and then falls between 2002 and 2011,and the redistribution effect of indirect taxes is negative,which means that indirect taxes increase income inequality.The degree of redistribution effect of the S-GINI index and GE index of redistribution effect is smaller than that of GINI index,which means that the low income group in China is large.Chapter ?:Research on the income distribution effect of VAT's expanding.Firstly,this article proposes a new decomposition method to analyze the effect of VAT's expanding on income redistribution effect of urban residents.The results show that,after VAT's expanding,the tax burden in different income group decreases as income increases and the VAT's expanding has an unequal effect on food,housing,household appliances and services,but has an equal effect on clothing,medical care,transportation and communications,education,culture and entertainment services.The VAT' expanding brings the unfair as a whole,but the unequal effect has been weakening,which is mainly due to the effect of average tax rate and structural differences in consumption expenditure.Secondly,this article analyzes the effect of VAT' expanding on the income redistribution of service industries.The results show that,after the VAT' expanding of some industries,tax burden of most service industries decreases,while tax burden of some service industries increases.Tax rate effect increase the tax burden of VAT's expanding,and tax base effect,as well as intermediate deduction effect,decrease the service tax burden of VAT's expanding,and the contribution of intermediate deduction of industry sector is higher than that of service sector.Besides,after VAT' expanding of all industries,the tax burden of most service industries will further decrease due to the further increase of intermediate deduction.However,the tax burden of real estate industry increase most,and the tax burden of telecommunications,railway transportation,postal service and rental service increases to some degree.Chapter ?:Conclusion.This chapter makes main conclusion of research,and proposes targeted policy proposal,and look forward to the future research on the income redistribution of tax regulation.