Analysis Of The Income Distribution Effect Of China's Personal Income Tax Expense Deduction System

In recent years,with the continuous deepening of reforms,the economy has entered a new normal,and the income level of Chinese residents has also continued to improve.At the same time,China's residents' income distribution has shown a markedly uneven state.The Gini coefficient has been at a high level for ten consecutive years,exceeding the international warning line of 0.45,and showing an expanding trend.Personal income tax is widely considered to have a role in regulating income distribution due to its progressive nature and direct taxation.Since the 19 th of the party.the central government has repeatedly stated clearly that it is necessary to improve the mechanism for adjusting the redistribution of income,including taxes.Focusing on people's livelihood and reflecting fairness,in 2019,China began to implement the new personal income tax law.Specific measures for fee deduction include raising basic deductions and adding six special additional deductions.Based on this tax reform,this paper explores whether the new fee deduction system has achieved the role of regulating income distribution,and on this basis,explores the direction of future fee deduction system reform,so that the fee deduction system has a role to reduce the income gap of residents and achieve the purpose of adjustment.This paper mainly uses simulation analysis and comparison methods to analyze the income redistribution effect of the current personal income tax system in China.This article uses the latest survey data from the Chinese Family Tracking Survey(CFPS)in 2018 to sort out and process the personal income and family-related information,determine the applicable fee deduction system,and simulate the calculation of the Gini coefficient and Gini coefficient after tax(referred to as MT index),after the overall tax reform.Observe the changes in the redistribution of residents' income in the sample.Then divide the income into quintiles according to the level,and simulate the measurement of the Gini coefficient and MT index after tax reform for groups with different income levels,observe the changes in the income distribution of residents under the new tax system.Finally,simulate the calculation of the impact of the adjustment of the cost deduction system on the income distribution of groups of different income levels based on the 2019 tax reform,whether to improve the income gap of residents,and to improve the deduction of personal income tax in China The system makes recommendations.This article consists of six chapters.Chapter one is an introduction,which introduces the background and significance of the research,summarizes and evaluates related literature,research ideas,research methods,and innovations and deficiencies in this article The second chapter introduce the theoretical basis of this article,and introduces how the fee deduction system produces income distribution effects and how it affects the Gini coefficient and MT index.The third chapter introduces the design status of China's cost deduction system and the current status of income distribution.The fourth chapter is the main part of this article.It uses a combination of simulation analysis and comparative analysis to conduct empirical research on the sample based on the whole and quintile.Chapter five is a reference for international experience,including some developed and developing countries.Based on the above analysis and experience,Chapter Six puts forward suggestions for improving China's cost deduction system.To improve the basic deduction of expenses,the standards can be appropriately raised and different standard limits can be divided according to the type of income,and annual adjustments can be made with reference to indexes such as the consumer price index and the inflation rate.As for the improvement of special additional deductions,the amount of special additional deductions can be increased or the scope and application scope of special additional deductions can be expanded.Finally,the fee deduction system can be improved in both aspects or separately,to achieve the effect of regulating income distribution.