Analysis Of Income Redistribution Effect Of Special Additional Deduction Of Individual Income Tax

The situation of income gap in China is becoming increasingly serious.Whether the individual income tax can effectively regulate the fair distribution of income has attracted more and more attention.Since January 1,2019,China has started a new round of reform on individual income tax.This reform innovatively introduces the special additional deduction policy,which is an important milestone in the history of China's tax reform.Under the background of the prominent income gap,it is necessary to study the income adjustment function of the special additional deduction of individual income tax based on the consideration of promoting the fair distribution and ensuring the implementation of the people's livelihood function.Enrich the theory of individual income tax adjusting income gap and test the effect of individual income tax reform.Therefore,on the basis of theoretical analysis,taking the current individual income tax special additional deduction policy as the framework,using the micro simulation calculation method,this paper discusses the income redistribution effect of the special additional deduction policy,and puts forward relevant policy suggestionsFirstly,this paper analyzes the theoretical basis of special additional deduction to promote the fairness of income distribution,expounds the basis of government intervention in regulating income distribution and the mechanism of special additional deduction to affect income gap.Secondly,it expounds the general situation of the special additional deduction policy,the significance of social civilization construction and problems.Thirdly,based on the latest data of China Family Panel Studies(CFPS)in 2018,it completely covers 6 special additional deductions.This paper distinguishes different age groups and different income groups.At the same time,it estimates the difference of individual tax paid before and after the implementation of special additional deductions through micro simulation,and then calculates and decomposes the MT index on this basis to evaluate the income redistribution effect of special additional deductions.The calculation results show that the introduction of special additional deduction has brought great tax reduction effect,and the higher the income,the smaller the tax cut.But as far as the overall fairness effect is concerned,the implementation of special additional deduction policy makes the income distribution more unfair,and only plays a positive role in regulating the income of middle and high-income groups.Finally,according to the existing problems of special additional deduction and the conclusion of calculation and analysis,the paper puts forward some policy suggestions in order to optimize the special additional deduction of individual income tax and strengthen the function of income redistribution.