Study On Effect Of Individual Income Tax And Basic Living Allowance System On Regulating Income Gap In China

With the rapid growth of China’s economy, the widening income gap has become a hotspot for all social circles and Chinese government also attaches an ever-increasing importance to the regulating significance of income gap. Individual income tax and the basic living allowance system are the major means to regulate the income gap and are also capable of regulating and controlling the distributing pattern of national income. Therefore, an empirical analysis of the two will be of much academic significance and can provide evidence for intensifying the reform of income distribution system in China.The paper consists of six parts:The first part is the introduction which illustrates the background, significance and problems of the subject, the study method, summary of ways and logical framework in writing the paper, as well as the innovation and inadequacy of the paper.The second part presents the basic theory of regulation of income gap and aims to provide theoretical basis for intensifying the reform of income distribution in China.The third part studies the overall status of income gap in China. The paper tries to describe comprehensively the status of income gap among Chinese residents respectively on national, urban, rural and urban-rural and inter-regional basis, and analyzes the causes of the changing income gap by reviewing various literatures.The fourth part illustrates the individual income tax and the basic allowance system, particularly their development and redistribution functions.The fifth part is the empirical analysis which studies the effect of individual income tax and the basic allowance system on regulating income gap by regarding the Gini coefficient as the measure standard.The last part provides the conclusion and policy suggestion to the paper.