A Study On The Effect Of Income Distribution In China 's Personal Income Tax

Since the reform and opening-up, our country has experienced six times larger reform in the personal income tax after initially established the relevant system of personal income tax. Each treforms follows with the development of economics, and incited a lot of discussion and attention. The last reform changes exemption amount increased from 2,000 yuan to 3,500 yuan, and the progressive rates is adjusted to 7 levels, less 2 levels than before. Although this reform improves the personal income tax, but did not solve the nature issue about income distribution and personal income tax. Fortunately, we have obtain some effectively ideas after many times of discussions, and formulate three reform policies. First, improve the income level of low-income people; second, expand low-income people; third, regulate high-income earners. So three problems are posed out, how effect the personal income tax adjust the income distribution gap? How to improve it? And how to achieve the social utility?This paper discusses these issues, and comparative literature research methods, other normative and empirical analysis to study the effect of personal income tax income distribution gap of residents. By calculating the Gini coefficient of disposable income of urban residents and the average tax rate, and combined with disposable income to build econometric models to detailed analysis the effect of personal income tax to adjust the income distribution gap. Considering that our personal income tax system is unifie, but the provinces have different economic conditions and structure, in view of the income gap is obvious in Yunnan province, therefore, we use Yunnan Province as the empirical object to observe and analyze the situation of the effect of personal income tax adjustment during 2003-2014, and extended it to the entire country.The empirical results show that the current personal income tax play a regulatory role on the income distribution gap, but limited effect. At present, the personal income tax system and tax collection are still have many problems in our country, the reform of personal income tax should be speeded up. In addition, raising the proportion of personal income tax in total tax revenue, improved disposable income of low-income groups, reduce the disposable income of high-income groups, raising the average tex rate of high income groups. Through this methods, the income distribution gap will be narrower, and the personal income tax can give full adjustment of income distribution.