The Effects Of Chinese Tax Structure On The Equality Of Income Distribution

The issue of income distribution was once considered the most likely event that led toinefficiency and confusion in turbulent bane of economic and social development. It washighly associated with the change of dynasties in China’s ancient history as well. The taxsystem does not only play the role of raising revenue for the government but also impartiallydistributing wealth among different groups. Domestic and foreign scholars analyzed theeffects of income distribution that tax affected from four perspectives---different theoreticalbasis that tax structure exerted to equally income distribution, empirical approaches, variousempirical analysis and reverse regulatory effects. It is concluded that in differentiatedcountries and different periods of development, the tax categories might have effect oraggressive effect to the income distribution. However, as the domestic researchers are of theproblems of the single research variation, not standardized and scientific approaches and falseor defective assumptions, there remains a large room to improve and innovate.This paper intends to conclude the characteristics of Chinese current tax structure andincome distribution conditions, conduct the theoretical as well as empirical approaches to fillthe unexcavated academic gap. The main idea of this paper is as follows---first analyze theimpact of tax structure and the income distribution’s logical connections, then demonstrate the“double subject” taxes and absence of property tax and insufficiency of direct taxescharacteristic of Chinese tax structure, then, subsequently establish cointegration equationswith bad income index as the dependent variable and other eight categories tax ratios asindependent variables go along with the Granger Causality Test to judge the relationshipbetween tax structure and income distribution, finally evaluate the efficiency and rationalityof distinguished taxes to income distribution from the above analysis. The conclusion isproperty tax has little influence to adjust the income distribution and direct taxes like businessand personal income taxes, to some extent, deteriorate the distribution let alone improve it.Thus, the paper offered impartial and considerable suggestions to the tax policies to thegovernment.