Research On The Impact Of Personal Income Tax Reduction On The Consumption Demand Of Middle-income Earner

The promulgation of the 2019 edition of the Individual Income Tax Law is a major change in the history of China’s tax system.The significant reduction of tax effect benefits the majority of middle and low income people,especially plays a positive role in promoting the economic growth of middle and low income people.The report of the 19th National Congress of the Communist Party of China pointed out that the need to further expand the proportion of middle-and low-income people will become one of the important indicators for China to achieve sustainable development.The implementation of preferential tax policies will promote the improvement of per capita consumption level of Chinese residents,promote the continuous improvement of consumption level of urban and rural residents,and promote the continuous improvement of consumption capacity of urban and rural residents.Therefore,a systematic analysis of the consumption behavior of tax relief on middle-income residents is both theoretical and practical.Starting from the purpose of the research,this paper defines the scope of middle income people,that is,the group with per capita income of 120,000-300,000 yuan,and explains the goal of personal income tax reduction.Secondly,on the basis of the analysis of the ways and intensity of tax reduction and exemption,the main ways of tax reduction and exemption to residents ’income distribution and reduce the inequality of income distribution,and clarify the role and effect of tax reduction and exemption on residents’ income distribution.Finally,the effect of individual income tax on the consumption behavior of the middle income group is studied,to verify its role in reducing personal tax burden and increasing personal disposable income,and to draw a more significant conclusion for the middle income group.Due to the increase of disposable income,tax relief will increase the proportion of Chinese residents in consumption,and thus have a certain impact on the consumption behavior of middle-income people.On this basis,according to the actual situation of China’s middle income group,how to improve the consumption power of China’s middle income group is preliminarily discussed.First,we will further optimize the tax reduction method for personal income,raise the standard of expense deduction,broaden the tax base,and lower the level.Second,deepen the reform of the tax system,carry out the "big comprehensive system,small classification" individual tax system,clear path,goals and steps;the third is to improve the individual income tax collection management system,so that it can better play its consumption regulation function for residents,and build a modern tax culture.