Study On The Impact Of Value Added Tax On The Income Distribution Gap Of Chinese Urban Residents

After the reform and opening up, China has created a miracle of economic growth,but at the same time also exposed some deep-seated contradictions, especially in the field of income distribution. Over the past decade, the state announced the Gini coefficient is maintained at 0.4 or more to explain the seriousness of the problem. In the Third Plenary Session of the eighteen explicitly proposed to narrow the gap between urban and rural areas, industry income distribution, and strive to build an olive based allocation pattern of policy oriented, the study of China’s urban residents income distribution gap is necessary and urgent. Tax is an important tool to adjust the income distribution, and the value added tax is our country’s first big tax. Therefore, this paper studies the income distribution gap of urban residents through the value added tax.Value added tax not only plays a good role in the organization of the financial revenue,but also promotes the social justice and economic development. However, the VAT tax burden is easy to pass, the tax burden will affect the tax adjustment function. Therefore,in the study of the impact of VAT on urban residents’ income distribution gap, we must take into account the tax burden shift. Tax burden shift is an important reason that causes the increment tax in the urban income distribution, and it has an important influence on the income distribution of urban residents.In this paper, we study the change of the value added tax burden of urban residents and the change of the Gini coefficient of tax before tax. After introducing the background and significance of this study, the paper analyzes the current situation of China’s urban residents’ income distribution and the role of tax in the income distribution. In this paper, the average annual income of urban residents in different income levels as pre tax income, with the average disposable income as tax income, and measure the different income levels of urban residents 2001~2012 years before tax income and Gene coefficient. The results show that the Gene coefficient of urban residents before tax, after tax, and the expansion of the trend, which shows that the income distribution gap is further expanded. At the same time, the difference of the Gini coefficient is calculated. The results show that the effect of tax in the distribution of income is very small.The third part of this paper mainly introduces the current situation anddevelopment process of the value added tax and the theory of tax burden shift. As an important part of the turnover tax, the value added tax is passed on in the process of commodity circulation. Among the many factors that affect the tax burden, the elasticity of supply and demand is the most important. In this paper, the elasticity of supply and demand of goods is determined by graphics and formula. When the supply elasticity is 0or the demand elasticity is infinite, the tax burden is borne by the supply side; when the demand elasticity is 0 or the supply elasticity is infinite, the tax burden is borne by the demand side; when the demand elasticity is greater than the supply elasticity, the supply side assumes more taxes, and vice versa. The tax burden shift form is varied, the main is before and after the transfer. VAT as jiawaishui, will affect the allocation of resources,income distribution should be in the process of tax shifting.The fourth part of this paper is empirical analysis, divided into two steps, the first step is to calculate the different income levels of urban residents to bear the VAT tax, the second step is to calculate the pre tax Gene coefficient, the Gene coefficient of personal income tax deduction, and after deducting the personal tax and VAT Gene coefficient.Estimates of different income levels of urban residents to bear the tax burden, the use of the data mainly from the "China City(town) life and Price Yearbook", through the consumption of urban residents involved in the process of value-added tax, the basic rate of VAT and low tax burden, then add the overall tax burden. Because of the tax burden shift, this paper introduces the ELES model to calculate the elasticity of commodity consumption demand of urban residents of different income levels, and obtains the tax transfer coefficient of different income levels. After calculating the real value added tax burden of urban residents, the Gini coefficient of different income levels is estimated. After the comparison of the Gini coefficient, we can know that the value added tax plays a role in the adjustment of the income distribution of urban residents in China.In this paper, we put forward some suggestions to optimize the function of value added tax in urban residents’ income distribution. One is to reduce the VAT rate, and gradually shift to the transfer tax and income tax of the "double subject" system structure; two is to reduce the value of life necessities of the VAT rate, reduce the value of low income tax burden; three is to improve the degree of transfer payments...