A Study On The Income Distribution Effect Of Payroll Tax

Since China's reform and opening up,Chinese income distribution gap has widened due to the rapid development of market economy.The problems of income distribution in China have been increasingly emerging.Payroll tax is a powerful lever which plays an important role in the process of adjusting income redistribution.After collating all the data of withholding individual income tax in L city H province which from 2011 to 2015,this thesis finds out the current payroll tax system plays different policy effects in the three different types of unit in in L city H province.This thesis uses the fixed effect's panel data methods to analyze the influences of deduction index K,average tax rate and progressivity on the MT index,and put forward some policy suggestions on how to improve the payroll tax income distribution effects.The research result indicates that the correlation coefficient of the deduction index K and the payroll tax income distribution effects are positive but less remarkable.The correlation coefficient of the deduction index K and the payroll tax income distribution effects is larger than the correlation coefficient of average tax rate and the payroll tax income distribution effects;but the average tax rate has more remarkable influences on payroll tax income distribution effects.According to the above conclusion,the author of the thesis think that when we pay attention to the reform of personal income tax in the future,we should build correct understandings on the payroll tax since it plays an important role in Chinese personal income tax system.We should promote reforms of payroll tax system and constructs the payroll tax system which suits China's national conditions.In the reform of payroll tax system,the pre-tax off-standard deductions of payroll tax should be added and the personalized deductions should be designed,which means setting deductions of education,medical and purchase interest based on the actual condition and make this factor fully play its effect on the income distribution effect.Meanwhile,we should give consideration to the average rate of payroll tax when we show solicitude for the progressivity of payroll tax.We can take measures like builds the synthesis and the classification unified method of declaration,devises scientific payroll tax rate brackets,constructs family-based payroll tax declaration methods.All these measures ensure the average tax rate of payroll tax within a reasonable range,make payroll tax income distribution effects works better and strengthen the leverage effects of payroll tax income distribution.