Study On Tax Regulation Of Residents’ Income Distribution

China’s economic achievement has been universally recognized and the living standard of the Chinese people has been highly enhanced since the reform and opening-up policy executed. Meanwhile, the income distribution among the Chinese residents has been not relatively fair, the income gap of the residents has gradually widened, the Gini coefficient has been over the0.4alerting point of world recognition, so the excessive income gap has been being the focus of social attention. The income distribution is an important issue of economy, a sensitive issue of politics and a sophisticated issue of society. If the income gap in a county is excessively wide, it will threaten economic development as well as social stability. Tax is a sharp tool to cut the wealth and an important measure for the government to regulate the income distribution. Tax is used to regulate income gap and soften the social rich-poor divide by its influence on the primary distribution and its participation in redistribution. Therefore, the author, from the point of tax and by means of the methods combined with theory and empiricism, makes a deep study on how the situation of China’s income distribution is and government use taxes to regulate the distribution.Tax has been given a great deal of attention by the countries in the world due to its function in social and economic development as a " automatic stabilizer" and the scholars both in China and the rest of the world have made theoretical study on tax regulation of income distribution. In this article, the author sorts out and introduces the theoretical achievements made by the scholars across the world so as to show that tax regulation of income distribution has theoretical support.Tax regulation of income distribution is achieved through its internal mechanism. So learning the internal mechanism and its operation is the premise which ensure the right direction and practical application of the study. The author analyzes how the internal mechanism of tax regulates income distribution and especially its operation mode from the aspects of tax structure, taxes and tax levy.There are many causes leading to income distribution gap. The author firstly makes analysis of the income gap in respect of rural and urban areas, regions, industries, and groups of people, then analyzes and demonstrates the causes of income distribution gap in terms of the dual economic structure, the priority strategy of regional development, industry monopoly, illegally making fortune and less effectiveness of tax regulation. As to the less effectiveness of tax regulation, the author gives his explanations and points out the main problems in terms of defects of tax structure, defects of taxes and policies, and lack of effective tax administration.Finally, the author raises some assumptions and suggestions to improve China’s current tax system and tax administration. In order to make full use of tax regulation functions, it is needed to establish a tax regulation system in which taxes coordinate one another and cover the whole process of income operation. The main contents of the tax regulation system should include the following aspects:The first is to improve the tax system design with VAT and individual income tax as its dual main taxes. The second is to improve the design of taxes so as to realize regulation over the whole process of income operation. The third is to improve the tax administration to enhance its effectiveness and ability by means of modifying the tax governance thought, making full use of information relating to taxes, intensifying the enforcement of tax laws, raising tax compliance.