The Study On The Effects Of Income Distribution Of VAT Rate Simplification

The issue of income distribution has always been a hot topic in the field of economics.The report of the Third Plenary Session of the 18 th CPC Central Committee stated that "regulate the order of income distribution,improve the income distribution regulation mechanism and policy system,increase the income of low-income people,and expand the proportion of middle-income people.We will narrow the gap in income distribution between urban and rural areas,regions,and industries,and gradually form an olive-shaped distribution pattern.VAT is the largest tax category in China,it is necessary to study its impact on the income distribution gap of Chinese residents.The article mainly consists of two parts: theory and evidence.The research contents and conclusions are as follows:This paper starts from the perspectives of social justice,welfare economics,public choice school and other theories,expounds the theoretical basis of tax adjustment income distribution,analyzes how different taxes are set to play the role of regulating income distribution,and conducts specific measurement methods.Introduction.Under the theoretical foundation,the specific situation of VAT is analyzed,starting from its functional orientation and taxation characteristics,explaining the role of VAT rate setting in promoting tax efficiency and tax fairness,and analyzing the economic effects of tax rate setting.Next,we will sort out the domestic and international situation of tax rate setting.Generally speaking,there are fewer countries with four-level VAT rate,and the tax rate structure of “basic tax rate +low tax rate” is mostly,which provides an international reference for China’s next VAT rate reform.In the empirical analysis,this paper uses the input-output price model to calculate the average tax rate of residents in different income groups before and after the VAT rate reform.The analysis shows that:(1)The tax burden of urban and rural residents is the highest as four-rlevel tax rate.(17%,13%,11%,6%),the original three tax rate(17%,11%,6%)and the current three tax rate(16%,10%,6%)are centered,expected two tax rate(15%,6%)is the lowest,the less-level VAT rate has reduced the tax burden of residents.(2)The tax burden of rural residents is generally higher than that of urban residents.The higher the income level is,the lower the tax burden is,and the different tax rate has not changed the characteristics of regressive ofVAT.(3)Through the impact of the tax burden of different income groups of urban and rural residents on disposable income,the Gini coefficient is calculated before and after the tax rate depreciation,and the VAT rate is reduced by the Gini coefficient,and the two-level tax rates have the largest decline of the effect of the income gap.(4)The MT index is negative under the four-level tax rate combinations,indicating that the VAT itself increases the income distribution gap,but when the tax rate decreases,the absolute value of the MT index gradually becomes smaller,indicating that the tax rate has reduced the income gap of residents.Finally,the policy recommendations given in this paper are:(1)Continue to simplify the tax rate model,reduce the basic tax rate moderately,and implement preferential tax rates for food,clothing,health care and other necessities.(2)Improve supporting measures for VAT reform,improve the deduction mechanism and improve the level of collection and management.(3)Optimize the tax structure,increase the proportion of direct taxes,reduce the proportion of indirect taxes,and optimizing income distribution pattern through the combination of other taxes.