Research On The Income Redistribution Effect Of Special Deduction Policy For Elderly Support In China

Firstly,this paper summarizes the connotation and theoretical basis of the special additional deduction for elderly support based on the theoretical foundations of the principle of tax equity,the principle of taxation by quantity and capacity,the theory of taxation regulating income redistribution,the theory of feedback and the theory of intergenerational support,and analyzes the special additional deduction for the elderly from the perspective of income redistribution based on the historical development of the policy of special additional deduction for the elderly.The policy of special deduction for elderly support is analyzed from the perspective of income redistribution,and the necessity and rationality of optimizing the policy in terms of the health status of the elderly,age level,the actual number of supporters,and the residential relationship between the supporters and the supported persons.Secondly,this paper adopts a quantitative analysis method to simulate the income redistribution effects of the current policy and the optimized scheme of the special additional deduction for elderly support based on the optimized design of the four deduction schemes,using the latest CHFS 2019 data and the MT index,which is a measure of inequality,and then uses the sample group reduction method to test the results and analyze the policy effects of different optimized schemes after the sample group reduction.Then,we further measure the pre-tax and post-tax Gini coefficients and the MT index for different income groups,different age groups and different regions for the optimization scheme with better policy effects,in order to show the effect of the optimization policy on income redistribution.The findings of the study are as follows.First,for the overall sample,both the overall sample and the reduced sample,the optimization scheme based on the age level of the dependents and the number of dependents is conducive to the income redistribution effect of the personal tax deduction for the elderly,while the optimization scheme based on the health level of the dependents and the residential relationship does not show a better income redistribution effect compared with the current policy.Second,the results of comparing the two deduction schemes with better income redistribution effects for different groupings show that both schemes focus on regulating the income redistribution of the upper income group under the income grouping condition;the income redistribution effects of the optimized deduction schemes are significant under the age grouping condition,and the deduction scheme based on the number of dependent elderly people focuses more on regulating the income redistribution of the middle age group,while the deduction scheme based on the number of dependent elderly people focuses on regulating the income redistribution of the middle age group.The overall policy effect of the deduction based on the number of elderly dependents is better than that of the deduction based on the age level of the elderly dependents;the deduction based on the age level of the elderly dependents has a stronger advantage in optimizing the income redistribution effect of the current policy under the condition of region as a group.And then,the paper adopts a comparative analysis of policy experience,selecting five countries and regions,including the United States,Japan,South Korea,Singapore and Hong Kong,China,to summarize the policies and regulations on the deduction of elderly support expenses one by one,and compares them with Chinese policy of special additional deduction for elderly support,and puts forward the next policy suggestions for Chinese deduction policy for elderly support in combination with Chinese real situation and the conclusions of this paper’s quantitative analysis and research.Finally,on the basis of summarizing the findings of previous studies and policy experiences,the following policy recommendations are proposed to optimize the special additional deduction policy for supporting the elderly in China from the perspective of promoting income redistribution.First,additional deductions should be provided for special groups mainly for the disabled and the sick elderly over 70 years old,so as to reduce the tax burden of the supporters,narrow the income gap,and protect the living standard of the elderly.Second,to develop differentiated deduction standards and divide the deduction standards according to the age level of elderly supporters to promote the redistributive effect of special additional deduction for elderly supporters.Third,to apply negative income tax to low-income people and subsidize the difference or full amount of their actual support burden,using actual expenditure needs as a condition to enjoy the policy benefits and providing a boost to enhance the income redistribution effect of the policy.