A Study Of The Impact Of Indirect Taxes On Income Distribution Of Urban Residents

With the rapid development of china economy recent years, people’s living qualityhave increased in a substantial. But at the same time, the unfair income distributionmakes the wealth gap growing between China’s rich and poor. There are someresearch draw a conclusion that the contribution of income distribution of Chineseurban residents to the national income distribution is growing year by year. Westerneconomic theory believes that the unfair of distribution of income is the sign ofmarket failure, so it is unable to solve if we just rely on market mechanism itself, sothe government should shoulder the responsibility of the residents’ income distributionadjustment. The regulatory function of taxation, as the most important macroregulatory means, play an important role in regulating personal income distribution.And the indirect taxes plays a dominate position in the current tax system. In recentyears, the indirect taxes takes more than60%ratio of the total tax revenue. So it isimportant to learn the impact of indirect taxes on urban income distribution.Based on this, this paper uses finance, econometrics, management theories andmethods, and makes an empirical study on the impact of the indirect taxes on theincome distribution of urban residents. And the contents are as follows:Chapter1: introduction. In this chapter, we describes the background andresearch significance, reviews of research status, main ideas and methods, innovationand deficiencies of this paper.Chapter2: Theoretical basis. In this part, we describes the main theoretical andempirical part of the required theoretical support for this paper.Chapter3: The statute of urban residents of the income distribution. In this partwe analysis the effect of the indirect taxes on the income distribution of urban resident.In this chapter, by use the method of micro-simulation, we analyze the actual taxburden of value-added tax, business tax and consumption tax. Then we make a briefanalysis of current situation by using the Gini coefficient and consumer welfare.Chapter4: The cause of the effects of the indirect taxes on urban resident’sincome distribution. In this part we find that there are two different causes, one isabout the irrational tax structure, the other is the unreasonable indirect tax regime.Chapter5: Suggestions. In this part we makes some good suggestions primarilyfrom the adjustment of both tax rate and tax base.Main conclusions of this paper: as a whole the indirect taxes play a negative roleon urban income distribution, and we find that this negative effect is mainly due to thelow-rate-value-added tax; the influence on consumer welfare of impose value added tax and business tax’s at the same time is greater than the influence of the two taxesitself. Combining the analysis of the effect and the cause, this part we make somegood suggestion of the overall vision. In the long run, we should increase theproportion of direct tax. In the short term, we can start from3aspects of reform. First,adjust the VAT items. Second, phase out the business tax, eliminating double taxation.Third, adjust the consumption tax rate structure and expand the scope of consumptiontax.