Analysis Of Theincome Distribution Adjustment Effect Of Social Insurance TAX And Personal Income TAX

Due to the implementation of the Allocation principles " Priority to efficiency and due consideration to fairness" and the regulation of market economy. The residents’income gap in China is getting more and more bigger, The issue of disparity in income per capita between rural and urban China is attractive. Excessive income gap will cause a series of social problems, and even cause social unrest. There are many indices of fair income distribution, one of the most important is " Gini coefficient". On January 18,2013, The national bureau of statistics released China’s gini coefficient from 2003 to 2012, Data show that the income allocation gap in China has surpassed the cordon that is generally recognized by the world. The government should remain on high alert for this, and take effective control measures to promote income equality. Personal income tax and turnover tax, inheritance tax, social insurance tax and other tax policy are the means of promoting fair income.In this background, this article expounds the theoretical basis of all kinds of tax policies how adjust income distribution. This text redefine the concept of Pre-tax income and after-tax income, and According to the statistical data of Jiangsu province in 2002-2011, did the empirical analysis On the individual income tax, social insurance tax and social welfare, in order to know the income distribution adjustment direction and strength of tax policy and security system in reality in our country, to help develop and reform the policy of narrowing the income gap. In order to research this problem, this text calculated the pre-tax gini coefficient, after-tax gini coefficient and tax adjusting effect.Through the empirical analysis, this paper argues that the income distribution regulation effect of the individual income tax was from reverse turn to positive, but the regulation effect is very weak, the highest number is o.62%; the income distribution regulation effect of the social insurance tax is negative, fortunately the negative regulation effect is only around 1%. The calculation of social welfare show that Residents welfare is reduced after leving social security tax and individual income tax, and the weak regulation effect of the ndividual income tax make the income distribution effects far below the economic deterioration effect, while after rising tax adjustment effect, t he situation is improved. This paper analyzes the causes of these results, and put forward a series of reform proposals according to these reasons. The unreasonable progressive tax structure, the unreasonable classification system and the unscientific expense deduction standard can explain the personal income tax’s weakly adjustment effect; flat rate, exemption and deduction and the ceiling can explain the social insurance contributions’ reverse adjustment effect.After a comprehensive theoretical analysis, empirical analysis and root cause analysis, can find that in terms of promoting fair income, not just the individual income tax, social insurance tax and other tax policy can narrow the gap between society, if turnover tax, inheritance tax and gift tax, etc could be well designed, can also play a big role, also won’t injure t he interests of the residents.