Study On Redistribution Effect Of Individual Income Tax And Reforme Upgrading

According to Musgrave,the distribution problem is much more difficult to deal with than the resources allocation,which is alwaysa primary(the only primary)focus of controversy whenmaking budget policy.Taking distribution into consideration in most cases is of decisive importance for the tax and transfer payment policy decisions.According to World Bank?s criteria for the economy development of each country,China has entered the ranks of middle to upper income countries in 2011.Meanwhile,the Gini coefficient to measure the income distribution gap has exceeded the international warning line in China.Compared with 35 OECD Member States China is near the spire place of “income inequality Pyramid”.Income distribution disparity is attached great attention from the CPC Central Committee and the State Council.In order to solve the problem it?s better for the government to play the role of regulation by standardizing the order of income distribution,increasing the income of low-income groups,regulating excessively high incomes,and establishing a comprehensive and classification of personal income tax system.Personal income tax is used to adjust income distribution gap because it is not only a stable source of income,but its tax elements include many means of regulation,such as progressive tax rate structure and expense deduction,which can adjust the aggregate supply and demand relationship with the fluctuation of economy.And that?s why personal income tax is called “automatic stabilizer”.While in China the function of personal income tax is efficiency instead of fairness.Although the personal income tax has become the fifth largest tax in China,the scale of tax revenue still cannot play the function of fairness due to adverse tax collection and management,the model of classification collecting beside sits regressive indirect tax structure,which at last weakened its redistributive effects.In order to eliminate the damage from unfavorable tax collection to its function of fairness the individual income tax needs to be reformed.Therefore,the research on the redistribution effect of individual income tax is of theoretical and practical significance.With the help of literature research,the use of international popular Lorenz curve fitting as the basis for the measurement equation of this article,according to“the degree of of pre-tax income inequality(the logical starting point)?personal income tax elements are fair(characteristics of personal income tax)?the fair ?s degree of of pre-tax income inequality(testing effects)?factors that affect the intensity of equitable contribution sorted(size of the tax decisive contribution)?mining potential effect(loss of tax revenue loss effects)?tax factors change whether the enhancing effect(Sino-US comparison)?lifting effect with the tax characteristics(recommended actions),through empirical research of tax redistribution effect policy recommendations can be given to the personal income tax reform.The conclusions can be drawn as follows:First,pre-tax income of urban residents grow rapidly,despite wage income declines slowly,the structure of income,consisting mostly of wage income,is basically unchanged,operating income and property income increase.As a result the income gap between different sectors is rapidly expanding.Whether the income gap within the income class or between the high and low income groups show“inverted U”trend with a rapid expansion and then the slow decline.In 2005 it reached the peak,then the trend of income inequality has been eased,but very limited.The income gap between the lowest and highest income groups is the most prominent,which expanded from 3.94 times in 1994 to 7.59 times in 2012.The income gap within the lower income class is obviously higher than that of the high income class.Second,the personal income tax system determined whether it has the function of redistribution.Progressive tax system is a necessary condition for the redistribution function of the individual income tax.From the result of tax incidence of different income classes it can be seen that high income earners bear more tax burden,so the personal income tax reflects the “ability to pay” principle to a certain extent.From the view of tax system elements the progressive tax rate structure makes the individual income tax has the characteristic of progressivity,while the high tax rate structure,unreasonable level distance,too many orders plus “no difference” cost deduction system reduce its progressivity to some extent.With individual income tax?rapidly increased income.Redistribution effect RE value presents the trend,at first grow slowly,then grow rapidly,and then grow slightly.But the absolute value is still low(RE(1995)=0.00012);RE(2011)=0.00338).Third,the reason why the higher tax progressivity did not support the effective redistribution effect is that the personal income tax can narrow the gap of income distribution only to a certain extent despite the rapid growth of its tax scale.That means the tax scale is the decisive factor for redistribution effect of the individual income tax,while the tax progressivity is a secondary factor.Fourth,the contribution of the tax scale provides a space for stimulating the potential of individual income tax redistribution effect.The size of tax loss caused by adverse tax collection and management is nearly 2 times the size of the actual collection(according to the tax rate applicable to all income classes in 2011).The loss of tax revenue caused 1/3 of the personal income tax loss effect theoretically(2011,loss(RE%)=33.46%)).Actual personal income tax redistribution effect was 0.00178,theoretical effect was 0.00295,effect loss was 0.00116.The best result of the control of loss tax revenue is that the Gene coefficient reduced by 0.00116 after tax,which is basically the same as the contribution of the tax scale(variance decomposition).Fifth,the perfection of tax collection and administration mode provides the space for the potential of the redistribution effect.In addition,personal income tax redistribution effect gap caused by classification mode and comprehensive mode of collecting cannot be ignored.Compared with the American model,in 2011,China?s personal income tax progressivity is nearly 2 times that of the United States,but the average tax rate is a quarter of the United States,scale of Taxation and redistribution effect is only about one tenth that of the United States(gap(k)=0.628,gap(average rate)=3.57,gap(tax)=11.12,gap(RE)=7.86).Personal income tax in the United States reduced the pre-tax Gini coefficient by 0.04224,while in China it only reduced by 0.0054(the tax base is the income after deducting the transfer of income).From the effect of decomposition,the effect of the average tax rate and the progressivity of RE are positive,the average rate of contribution is 0.06305,23 times of progressivity.The impact of China?s average tax rate on RE is also positive,but the relationship between progressive and RE is not clear.The contribution of the average tax rate is only 0.0047,equivalent to the progressivity contribution rate of the United States.This data not only verified the tax scale(the average tax rate)is the decisive factor of the individual income tax redistribution effect,but different taxable manner bring different redistribution effect degree(undoubtedly tax system is the most critical factor to determine the size of the tax).Also the redistribution effect of the Chinese personal income tax cannot be denied.Sixth,because there is no micro data after the important year of reform 2011,this year deduction standard of personal income tax expense increased substantially.Whether personal income tax has the progressivity(the increased standard of cost deduction damaged the progressivity)is the premise of further effective redistribution function.Through analysis of macro data the research draw the conclusion that personal income tax played the role of “fair” redistribution in 2011-2014,but the degree is uncertain.In addition,the overall tax system presents the regressive nature,and the regressive nature is constantly strengthened,which is decided by the tax structure,which mainly consists of the regressive turnover taxes,such as regressive value added tax and consumption tax.Business taxis progressive.Income tax,corporate income tax and personal income tax are basically progressive.Seventh,through empirical analysis it is proved that the scale of tax is the deciding factor of the redistribution effect of individual income tax,and the improvement of the level of tax collection and management and the change of the mode of collecting are also a breakthrough in raising the scale of tax revenue.A comprehensive plan for the integration and classification assessment model was designed,includes the tax arrangements,tax base expansion,the expense deduction system setting,selection of taxpayer identity,the tax structure optimization,tax indexation et.Under the conditions of tax collection and administration which have been or will be available,Put forward the idea of step by step reform.Furthermore,under the conditions of tax collection and administration which have been or will be available,reform plans are provided.The main innovation points of this dissertation are as follows:1.Innovation on research perectiveThe previous study on the personal income tax redistribution effect gave too much attention to the progressive and decomposition.This is because only when the tax system is progressive,the revenue will be having function of reducing the gap of income distribution.That is to say,“tax is progressive” is the necessary condition for the function of tax redistribution(positive).In a progressive tax system,the average tax rate is the decisive factor in the realization of the individual income tax fairness function.However,the existing researches do not contribute to the redistribution effect of the average tax rate and its decomposition.2.Innovation on research methodsFirst,the fitting function is applied to the study of the redistribution effect of the individual income tax,which improves the precision of the research and makes up the measurement error caused by domestic insufficient data sample points.Second,use the KP index method to update the dynamic trend of China?s personal income tax progressivity and make up for the deficiency caused by the lack of micro data.Third,Compare redistribution effect of individual income tax differences of different taxable mode countries through empirical research method and provide tax reform direction for decision makers.3.Expension of research contentFirst,this dissertation makes up for the lack of quantitative research on the effect of the redistribution of tax revenue by model measuring the contribution degree and direction of each factor to the individual income tax redistribution effect and expand study on the redistribution effect of personal income tax.Second,Calculate the loss of individual redistribution effect on the basis of improving tax capacity model and by constructing the theory of redistribution effect model to fill the lack of research on the effect of individual income tax in China and provide decision makers with the spatial distribution of individual income tax.Thind,according to the degree of difficulty of the reform of the personal income tax model the implementation plans for upgraded reform are given,which has important reference value for the reform of personal income tax in China.There are still some shortcomings needed to be improved in the further research,such as the theoretical study of the redistribution of personal income tax,the horizontal comparison between regions and countries,the international inspection of the KP index method,the policy effects of the reform and upgrading,etc.