A Research On China's Income Disparity And Finance Modulation

China's economy has grown up quite rapidly since the reform and opening-up policy in 1979. Meanwhile, China's distribution structure has also changed a lot. In recent years, the income disparity has become much greater than before and Gini Coefficient is much higher than accepted. Distribution problem is not only an economic but a social problem. A well-operated society needs both efficiency and justice. A relatively large income disparity may have many serious side effects towards economic and social stability. Because of uniqueness of national conditions, neither restriction of market economy nor immediate wealth distribution can be taken as the political means of reducing the income disparity in China. Finance and tax modulation has become a proper measure that may keep income disparity within a rational range.At present, the finance and tax modulation has not been brought into full play yet. Deficiencies include: repeated calculation of transfer payments, relatively small disbursement, chaotic use of special funds, limited coverage of social security funds, narrow range of capital sources, lower socialization of management and service, etc. Thus, financial disbursement structure is waiting to be bettered; the size of education input should be increased; income disparity should be reduced through increasing the amount of transfer payments; the living standard of the low-income groups should be ensured through the enlargement of social security coverage and scientific management of social security fund; individual income tax and property tax needs to be improved; inheritance tax and donation tax needs to be designed scientifically; property management tax should be introduced at the proper time.In this thesis, the author pointed out the trend of finance/tax modulation against income disparity through analyzing the deficiencies of the present policy's implementation. And the author also tried to make her own contribution towards the improvement of finance/tax modulation from both theoretical and practical perspectives.