Discussion On The Definition, The Cause As Well As The Regulations Of The Gray Income

In China, with the process of economic transition, gray income quietly spread to all economic activities of the society. No matter in economic level, social level, political level or in the social climate level have had a lot of adverse effects, which inevitably affected the social justice and building a socialist harmonious society. Under such circumstances, how to correctly understand the gray income becomes essential.This paper makes a reasonable standard definition of gray income-gray income ranges between "black income" and "white income", with ambiguity, opacity. It is not taxable. Gray income should be divided into two categories, the first category refers to the income which was unreasonable and laws has not yet clearly defined; the second category refers to the income which is reasonable but not included in the scope of legitimate income beneficiaries lack of specification. Next, this paper analyzes the causes of gray income and its influence in all aspects of the society. Gray income as a common social phenomenon, has very deep social roots and many reasons. Because of gray income tremendous impact on society, so we have to give them adequate attention. This paper discusses the method for estimating the gray income, and raise formula of the total income of the community and individuals. From the perspective of political economy, this paper use Relative Income Theory of Consumption, Life Cycle Theory and Cost-Benefit Model to analyze the motive of the government, enterprises and individuals' rent-seeking behavior. Finally, propose corresponding policy recommendations to governance gray income.