Research On The Mechanism And Effects Of Personal Income Tax Adjusting Urban Households' Income Distribution

With the deepening of our county's market reform, the income gap will gradually expand. The income gap is too large will affect the economy, even the social development will be unstable. Therefore, it is necessary to study the function of Personal Income Tax on income distribution as well as the growing of income gap. Currently, almost all research about income distribution has a way to study that is to make the total income as the pre-tax income, and make the disposable income as the after tax income, because we can't get pre-tax income and after tax income. Well, at last academia can't know how Personal Income Tax regulates the Urban Households'income distribution. And what this article writes bases on the data deficiency and method deficiency.This article based on the analysis in the literature, theoretically and empirically analysis the income distribution function of personal income tax. Firstly, this paper detailed analysis the meaning of pre-tax and after-tax income. That the total income and disposable income do not represent pre-tax and after-tax income, because they contain social security system on income distribution, so it needs to be raised from personal income tax. And finally find out a specific method to calculate pre-tax and after-tax income; Secondly, this paper detailed analysis that how the tax scale, Exemption, progressive, lower or higher taxes, levy rates, economic growth, the collection of modes and so on to adjust the Personal Income Tax to distribution; Finally, we calculate the GINI coefficient and OU XIMA Index on the base of National and Tianjin income data, and find out how well the Personal Income Tax effects the income distribution.By empirical analysis, we think that Personal Income Tax play a positive regulatory role not only in Tianjin or National but also in GINI coefficient and OU XIMA Index. However, this positive regulation is relatively small– just only within 3%. This weak intensity is due to the smaller individual, tax rate poorly designed, slow income growth of low-income groups, the collection of patterns not fit to the tax and so on. So to make Personal Income Tax play a larger role for adjusting income distribution, we need to expand the scale of personal income tax revenue, strengthen collection and management, proper selection of Exemption, the progress and the rate of cumulative adjustment to enhance revenue growth of low-income group and mode conversion charge enhance improvement.