Research On The Design Of Personal Income Tax System Based On Middle-income Groups

Over the past 40 years of reform and opening up,China's economic and social development has achieved fruitful results,and people's living standards have been gradually improved.While China's economy and society have achieved leapfrog development,the problem of insufficient development imbalance has become more prominent,and the income distribution gap of residents still exists.Especially since2020,due to the impact of the COVID-19 epidemic,the employment and income pressure of low and middle income groups with labor income as the main source has increased.The loose monetary policy has led to an increase in asset prices,which has increased the asset appreciation and asset income of the wealthy class,thus further widening the income and wealth gap of residents.Middle income group,as the backbone of the whole society,are the main force to stabilize society and expand domestic demand,and are the foundation of forming olive-type income distribution pattern.Sociology holds that in a modern society,middle income group should account for 60%-70% of a society.According to the research of most scholars,the proportion of middle income group in China is less than 50% at present,and the income distribution of residents is still a pyramid structure dominated by low and middle income groups.According to the National Bureau of Statistics,in 2019,nearly43% of the population have a monthly income of less than 1,090 yuan,nearly 69%have a monthly income of less than 2,000 yuan,about 84% have a monthly income of less than 3,000 yuan,and the proportion of people with a monthly income of less than5,000 yuan is as high as 95%.According to the report to the 19 th CPC National Congress,on the basis of finishing building a moderately prosperous society in all respects,we will significantly increase the proportion of the middle income group from 2020 to 2035 and basically realize socialist modernization.The Outline of the 14 th Five Year Plan points out that measures will be taken to increase people's income and reduce the burden on them simultaneously,expand the middle income group,and continue to unleash the potential of consumption.Therefore,how to make the low income group further step into the middle income group and high income group,so as to expand the proportion of the middle income group,is still a major issue facing China in the future period of time.In addition to creating wealth and increasing residents' income through reasonable incentives and necessary competition in the initial distribution link,it is also necessary to rely more on redistribution to ensure social equity and enable all members of society to share the fruits of China's economic development.As a direct tax,personal income tax is an important tool to adjust income redistribution.From the perspective of international experience,a perfect individual income tax system can play a significant role in narrowing the income gap between residents.However,according to the research of most scholars,China's personal income tax system has not fully played its due role,and even appears ‘reverse adjustment' of taxation,which further widens the gap between the rich and the poor.Although our country since October 2018,the implementation of the personal income tax reform,achieved by the classification to the synthesis and classification of the transition of the combination of personal income tax system,to a certain extent,reduce the tax burden of the low income group,but how to make the personal income tax in expanding the middle income group and narrow the gap between rich and poor to play a bigger role,need to further promote the reform of personal income tax system.The dual income tax system introduced by Nordic countries in 1990 s,which advocates giving different taxation standards to capital income and labor income,provides a reform idea and train of thought that can be used for reference.This paper from the perspective of expanding middle-income groups,studies the dual taxation mode which accords with the situation of our country and its design problem,based on the different income groups of comprehensive labor income and capital gains tax,thus increase the disposable income of middle-income groups,reduce labor income taxes,to expand the middle-income groups in our country,narrow the gap between rich and poor,It is of certain theoretical and practical significance to form the pattern of olive income distribution and realize the goal of common prosperity.This paper compares the relevant literature system in this paper,and the problems existing in the current taxation mode in our country are analyzed,based on the theory and simulation analysis,by the method of CGE model and empirical test,found that for our country,aim to narrow the gap between labor and capital elements of the income distribution of the dual taxation mode,It will help expand the middle-income group.It is also found that the positive effect of tax reduction for middle and low income groups can offset the negative effect of tax increase for high income groups,and then a group of optimal tax structure is obtained.At last,based on the middle income group,this paper puts forward some policy suggestions to improve the individual income tax system of our country: First,improve the scope of taxation.Expand the scope of taxation of residents' capital income,gradually include capital income other than income from property transfer,fund income,trust investment income,dividend insurance income and other capital income into the scope of taxable capital income,and consider including some capital gains items in the scope of the comprehensive levy;The second is to optimize the tax rate structure.Under the framework of the binary taxation model,progressive tax rates should be adopted for both labour and capital gains,and the labor income tax rate and capital income tax rate corresponding to middle-income and low-income groups should be reduced on the existing basis and the progressive tax rate should be reduced;Third,strengthen tax collection and management.Establish and improve the credit management system for residents' tax payment,strengthen the information sharing and tax-related information networking in all sectors of society,regulate the scope of transactions of the platform economy legally,establish the platform economic tax-related information sharing mechanism from the system,and speed up the application of digital RMB in the field of taxation.