Research On The Welfare Effect Of Personal Income Tax Reform Based On CGE Model

As an important part of China's tax system,personal income tax should have played a greater role in adjusting income distribution and improving social welfare level.However,due to the imperfect personal income tax system in China,its role in improving the income gap and welfare level of residents is limited.Therefore,from the perspective of welfare effect,this article analyzes the impact of my country's personal income tax policy changes on different income classes and the overall welfare level of society,which is of great significance for the scientific evaluation of the effect of personal income tax reform.This article summarizes and reviews the current status of domestic and foreign research on related issues,systematically sorts out the relevant basic theories of personal income tax policy and welfare effects,compiles a social accounting matrix based on 2017 input-output table data,and builds on the basis of the standard CGE model.The CGE model of departmental taxation is used to simulate the impact of personal income tax reform on residents' welfare effects.Different from the traditional CGE model,this article divides residents into low,middle and high income groups by fitting the income data of residents and referring to the classification criteria of middle income groups.The introduction of heterogeneous income modules in the CGE model makes the model can systematically and quantitatively assess the impact of tax system changes on the welfare effects of different income classes.The model uses GAMS software to conduct an empirical analysis of the simulation scenarios of personal income tax reform.The results show that: under the new tax system,the welfare level of all income groups has been significantly improved;keeping the tax rate structure unchanged,and increasing the exemption will increase the welfare level of high-income residents,while the overall welfare level of the society is damaged;setting a higher level of exemption,while reducing the tax rate,reducing the level,and expanding the range of the simulation program is conducive to improving the welfare of middle-income groups.At this time,the overall level of social welfare is improved.According to this,further suggestions for future personal income tax reform are put forward from the following aspects: scientifically setting the exemption amount,supporting the reform of the exemption amount and tax rate structure,perfecting the construction of special additional deduction system,establishing a tax collection and management system with informatization as the core,and dealing with personal income tax under the epidemic situation,which are helpful for improving the welfare level.