Analysis Of The Economic Effects Of Personal Income Tax Regulating Urban Residents' Consumption

Consumption is one of the “troikas” that drives the growth of the country's GDP.Enlarging residents' consumer demand is the main driving force for economic growth,and the level of consumption of residents is determined by the level of consumption power,that is,the income level of residents.According to Keynes' s law of diminishing marginal propensity to consume,residents' consumer expenditure increases with income,but the marginal propensity to consume of residents decreases as income increases.At present,the proportion of low-and middle-income income in China is relatively large.The overall consumption level of residents in our country is not high and there is still much room for improvement.By raising the income level of low-income earners,expanding the proportion of middle-income groups,and effectively regulating excessively high incomes,the gap between the rich and the poor can be narrowed,consumption levels can be raised,and the steady economic development can be promoted.The personal income tax in China's tax system is a direct tax.It is difficult to transfer the tax burden.It is possible to reduce the income of low-income people by collecting less or not tax.The income gap can also increase fiscal revenue.This article chooses to analyze the economic effects of personal income tax affecting urban residents' consumption from the perspective of taxation,and discusses the ways in which personal income tax reform can promote the consumption demand of residents.The main economic effect of personal income tax on residents' consumption is that the government can directly increase the disposable income of residents by increasing the amount of exemption or reducing the marginal tax rate of individual income tax,etc.,and thus promote the residents' disposable income.The increase in consumer spending can also increase the taxation of high-income groups,and indirectly transfer the tax revenues obtained from high-income groups to low-income groups through transfer payments,thereby narrowing the income gap and promoting residents' income.The role of consumption.Because according to Keynes' s law of diminishing marginal propensity to consume,the absolute amount of increase in consumption expenditure of middle and low-income groups is higher than the absolute amount of reduction in consumption expenditures of high-income groups.Therefore,fully exerting the tax adjustment effect of personal income tax will effectively promote the overall consumption level of society.Thepromotion.China's individual income tax revenue mainly comes from the income of urban residents,and urban residents are also the main consumer groups in the society.Therefore,this article analyzes the economic effects of personal income tax on urban residents' consumption in China during the transformation period.The following aspects have been analyzed: First,theoretical analysis of the economic theory of consumption and the role of taxation in regulating consumption;the second is the description of the status quo of urban resident consumption in China and the related problems;the third is from The impact of personal income tax exemption and personal income tax burden on household consumption has been empirically analyzed.Fourth,relevant policy recommendations have been put forward to reasonably optimize the adjustment effect of China's personal income tax consumption.