Study On The Mixed Income Tax Based On An OLG Model

The current personal income tax policy system cannot effectively adjust the distribution of income.The structure is unbalanced,and the classification collection mode is difficult to embody the principle of taxation on capability.Comparing the characteristics of each tax system and weighing the costs and benefits of institutional changes,the mixed income tax system should be adopted as the goal of reform.We built the heterogeneous overlapping generations model to analyze how the labor income tax rate and capital income tax rate affect human capital investment,the distribution of wealth and economic growth.We assume that wealth can be passed between generations.The initial wealth endowment will affect the individual human capital investment behavior.It influences the economy's total output by changing the relative quantity of the labor force,and changes income distribution and the initial wealth endowment of the next generation.The effect of individual income tax can be studied by comparative static analysis.In the short-term equilibrium,the tax rate affects the distribution of wealth by changing the income gap between groups and relative size of population.The effect is complex,so theoretical analysis cannot draw a clear conclusion.In the long-term equilibrium,the inequality of wealth distribution can be reduced by reducing the property tax rates and labor tax burden of the low-income,and increasing labor tax burden of the high-income.In order to further explore the mechanism of income tax,the generalized difference model is established for empirical simulation analysis.The quantitative results show that improving low-income labor tax burden,reducing their burden of property tax,or reducing high-income's labor income tax burden,all can reduce the inequality of wealth distribution.Moreover,the impact of labor tax on class mobility and the number of each income group is greater,and the effect of property tax on the average level of group wealth and income gap between groups is even greater.Finally,based on the above theoretical analysis and empirical analysis,the corresponding policy suggestions are put forward.