Personal Income Tax Progressivity Throughout Economic Growth

Personal income tax not only can collect income for government, but also can redistribute people income. England started to levy personal income tax in 1799 just for collecting military fee. But with economic growing, peace and development becoming the world subject, and the income gap becoming big, the redistribution function of personal income tax becomes more important. The redistribution function of personal income tax is attributed to its progressivity, that is who have high income should be taxed higher tax rate. However, the extent of personal income tax depends on both the progressivity and the proportion of personal income tax to all taxes. This paper analyses the trend of personal income tax progressivity and provides help for the reform of personal income tax and economic development.This paper follows "theory analysis---empirical analysis---conclusion" and is organized as follows:Chapter 1 is the introduction, including the background and significance, structure, methods, innovation and shortcoming of this paper. The second chapter is literature review, introducing the measurements of tax progressivity, the factors of personal income tax progressivity, and the relationship between economic growth and personal income tax progressivity. The theory of personal income tax is provided in chapter 3. There are four sections in this chapter:the concept and measurements of tax progressivity; personal income tax progressivity and tax system; the influence of economic development for personal income tax; the influence of government regulation and control. Chapter 4 analyses the personal income tax progressivity of some countries, including the overall analysis for personal income tax progressivity of some countries and analysis for personal income tax progressivity of United States. Chapter 5 is the analysis of Chinese personal income tax progressivity. The method in this chapter is panel date threshold regression, which is the innovation in this paper. The last chapter is the conclusion. Chapter 3 is theory analysis, the basis of this paper. Chapter 4 and chapter 5 are empirical analysis, which are the important parts of this paper. Chapter 6 is the conclusion.Through theory and empirical analysis, we have the following conclusions:the fist, the vary of personal income tax progressivity is the result of the reform of personal income tax, regarding income distribution equality and economic development. The second, the correlation between economic growth and personal income tax progressivity is negative. The third, tax exemption and rate structure are the two important factors influencing personal income tax progressivity. The fourth, the progressivity of personal income tax in our country is not low. The reason why the function of redistributing income is small is because of the low practical progressivity and the low proportion of personal income tax to all taxes. And we suggest that:the first, decentralize the authority of tax management. The second, we should improve the personal income tax system. The third, we should increase the proportion of the personal income tax to all taxes. The fourth, we need to enhance tax collection and management.