A Study On The Effect Of Redistribution Of Individual Income Tax In China

In recent years, with the continuous development of China’s economy, national income increases sharply, but the income gap between the residents is constantly expanding. Personal income tax, as an important tool to effectively adjust the redistribution of income, has been concerned by people. Especially with the four session of the twelve National People’s Congress was held, the personal income tax reform has become the focus of the topic. One of the main function of the individual income tax is to adjust the income distribution, so it is necessary for us to target recognition and measure China’s personal income tax redistribution effect, this is the main purpose of writing.For a long time, western countries has a more in-depth study on the personal income tax redistribution effect. So first of all we study the theory of individual income tax redistribution effect and the domestic and foreign literature about the personal income tax redistribution effect, lay a theoretical basis for this paper. Secondly, analysing the current situation of the regional, urban and rural areas income gap and the reasons for widening income gap among them. Thirdly, using datum to calculate Gini coefficient, Gini coefficient decomposition method, Kakwani progressivity measurement method, average rate progression index and marginal rate progression index to quantify and progressivity of personal income tax redistribution effect in China; and examine the effect of 2011 China’s personal income tax reform on the redistribution effect. At the same time investigating the causes of weakening our country tax redistribution effect. As a result, from the perspective of enhancing tax redistribution effect, proposing changing personal income tax model, reducing tax rate level distance, widening the scope of the tax, strengthening the management of welfare, establishing expense deduction standard automatic adjustment mechanism and improving the personal income tax collection and management service system in China.