The Regulating Effect Of Personal Income Tax On Urban Residents' Income Gap Between Cities

As the third largest tax category,the personal income tax has become increasingly prominent.Therefore,whether the personal income tax can achieve its expected function as tools to narrow the income gap has always been a topic of widespread concern in the society and academic fields.Recently,the publishment of the amendment for the personal income tax law made this topic more heated.From the point of view that the personal income tax may have different influence on cities with different income levels,this paper demonstrates there exists a mechanism that personal income tax can have both the primary and supplementary regulating effect on income gap.However,this paper finds that the personal income tax is difficult to play the regulating role of narrowing the income gap between cities in practice.Firstly,by theoretical analysis,this paper finds that because of the problems with the tax rates structure,expense deduction,classified tax collection pattern and usage of tax revenue,either the primary or the supplementary regulating role of personal income tax cannot behave well.Besides,by empirical analysis with the method of quantile regression,using the panel data of prefecture-level cities from 2005 to 2013 in China,this paper finds that,in the view of primary regulating effect,personal income tax will significantly reduce the income level of the middle-income city group.While for the high-income city group,the effect is limited compared to their sufficient income.Therefore,the income gap between the middle-income city group and the low-income city group is narrowed while the income gap between middle-income city group and high-income city group is widen,which means the regulating role of personal income tax is not so satisfactory.