China's Tax Structure And Income Distribution Fairness-considering Off-the-books Income Factor

Since reform and openness, China has achieved rapid development in economy. In the meanwhile, however, the problem of big income gap of Chinese is getting worse and become a hot issue of public concern. Tax as an important means of national macro-control, undertakes the task of regulating income distribution. Based on the income data which embedded the gray income factor, this essay analyzes the relationship between china's tax structure and income distribution fairness in a quantitative way by means of co-integration and error correction model.In the essay, the grey income factor is taken into account according to the international paradigm, and the related parameters are obtained by the microscopic method of grey income estimation. Firstly, the data of residents' income are adjusted to get closer to the real ones. And a more representative income gap index is calculated by using the method of variance. Secondly, the co-integration and error correction model to study the relationship between tax structure and the real income gap. Finally, on the basis of above research, the consumption tax and personal income tax to the same model to study their relative effects on the income gap index. The results indicates that, at 5% significant level, the overall tax burden, the proportion of resource tax, consumption tax, personal income tax all have significant co-integration relationship with the income gap index. Wherein,the proportion of consumption tax has a negative correlation to the income gap index, that is, personal income tax has reverse regulation on the income gap.