Research On The Tax System Progressivity Of China

Tax as an important tool in regulating income distribution to adjust income distribution effects depend on the degree of progressivity of the tax system. In this paper, tax progressivity is of great significance to enhance the regulation of income distribution and to reduce income inequality. Tax progressivity is one of the core contents of the theory of tax equity and tax welfare economic theory, research tax progressive is to further deepen the tax basic theory.This article is to study tax progressivity, concerned about the impact of tax progressivity of the income inequality and efficiency, and to analyze of philosophical ethics and welfare economics foundation of tax progressivity. By interpretation, review and discussion of the decomposition theory and measurement methods of tax progressivity to determine the concept and calculation method of tax progressivity in this article. Base on classical and modern methods of measurement of tax progressivity, selected modern calculation method of tax progressivity, KP index (Kakinaka&Pereir,2006), estimated that China’s macro tax burden is progressive from1992to2010. China main taxes actually progressivity from1992to2010and China31provinces, autonomous regions, municipalities’tax progressivity level from2001to2010were Calculated Select the average tax rate method (Pigou,1928) and the tax payable method of classical measurements (Musgrave&Thin,1948), Calculated USA’s2010personal income tax statutory progressivities and the statutory progressivities of personal income tax before and after the2011personal income tax reform, and to compare them to find that in2010China statutory progressivity of personal income tax with the U.S. results of the comparison depends on the different measurement methods, the2011tax reform obviously changed the statutory progressivity of personal income tax.Based Duncan&Klara Sabirianova, Peter (2008) theoretical framework, according to China’s31provinces, autonomous regions, municipalities’tax progressivity measureed with Theil index (the Theil coefficient) said that the degree of income inequality to establish the panel model to study the relationship between tax progressivity and income inequality of Chinese31provinces, autonomous regions, municipalities. Based on the thesis of Li&Sarte (2005), in line with endogenous economic growth model utilized in tax progressivity stady, establish a panel model using China’s31provinces, autonomous regions, municipalities’tax progressivity and the actual economic growth rate, study the relationship between tax progressive and economic growth. Two assumptions were verified. One is the higher the degree of tax progressivity, the higher the fairness assumptions. Another is the higher the tax progressivity, the lower of economic efficiency. The main conclusions are:China’s overall tax system and the main tax progressivity are not strong, the regional tax progressivity and regional development level are not necessarily linked, the optimal degree of tax progressivity depends on social equity and efficiency trade-offs. This paper concludes the revelation of tax reform and further research prospects.