Expense Deduction Standard And The Redistribution Effect Of Individual Income Tax

With the rapid development of China's economy,the income gap is expanding.As an effective tax to regulate income distribution,it is necessary to study the income redistribution effect of individual income tax.In the reform of individual income tax,the change of expense deduction standard is often involved.Whether the improvement of expense deduction standard has a positive effect on the redistribution effect of individual income tax and tax progressiveness,and whether it has a stronger effect on redistribution compared with the change of the average rate.These problems are worth discussing and studying,and it can provide reference for the future direction of individual income tax reform.This paper theoretically analyses the goal and mechanism of individual income tax regulating income distribution,expounds the relevant indicators and decomposition indicators of redistribution effect,and how the expense deduction standard affects the redistribution effect of individual income tax.Then it introduces the function of expense deduction standard,combs the development process and system.In the empirical study,the data of CHFS are used to make a general analysis,and then further analysis is made from the perspective of income class and region.Finally,the data of 2016 are used to simulate the individual income tax reform in 2018,and the effects of average tax rate and expense deduction standard on individual income tax redistribution are analyzed and compared.Based on the above empirical study,some conclusions and suggestions are given.The results show that: firstly,the expense deduction standard has a positive effect on tax progressiveness,but it will reduce the average tax rate,and the effect of income redistribution will rise first and then decrease with the improvement of the expense deduction standard.Secondly,when the standard of expense deduction reaches a certain level,the effect of average tax rate on redistribution effect is greater than that of tax progressiveness.Therefore,in the future reform,we should not improve the progressiveness of tax revenue by raising the expense deduction standard,but should pay attention to the influence of average tax rate.Thirdly,through the study of income stratum,the improvement of expense deduction standard can increase the tax share of the high income stratum and reduce the tax share of the middle income stratum,thus improving the tax concentration and progressiveness,but it will make the Gini coefficient first decrease and then rise.Fourthly,from different regions,the average tax rate of individual income tax is higher in areas with good economic development,which can better play the role of regulating income distribution.In different regions,when the deduction standard reaches a certain level,further increase will reduce the redistribution effect of personal income tax.According to the above conclusions,this paper puts forward some suggestions: first,from the perspective of redistribution effect of individual income tax,it is not recommended to set expense deduction standard too high,but from the perspective of reducing tax burden of residents and considering price cost,it needs to be adjusted.Second,according to the economic level of different regions to develop appropriate cost deduction standards.Thirdly,we should strengthen the control of tax sources and raise the actual average tax rate.Fourthly,we should optimize the tax rate structure and increase the proportion of individual income tax so that the redistribution effect of individual income tax can play a better role.