An Analysis Of The Income Redistribution Effect Of Personal Income Tax

With the rapid development of China’s social economy,the overall income and material living standards of residents continue to improve,but the income gap between residents is increasingly widening,which is not conducive to social stability and sustainable economic development.As a typical direct tax,personal income tax has a unique progressive tax rate structure,and its income adjustment function has therefore received more attention,assuming the important responsibility of adjusting the income distribution of our residents.However,due to the current level of tax collection and management and the lagging tax reform,the regulatory capacity of individual income tax has not synchronized with the level of economic development.Therefore,this thesis focuses on the current income adjustment effect of individual income tax,analyzes the main reasons that hinder its positive adjustment effect,and proposes corresponding optimization strategies.The introduction and theoretical basis section combs and summarizes relevant literature at home and abroad,uses relevant theories to demonstrate that personal income tax is a "good tax" for regulating income redistribution,summarizes the income redistribution effects of personal income tax and its measurement methods,and discusses the necessity of further improving the personal gains tax system.The data analysis section analyzes the income situation and the overall Gini coefficient of personal income tax in China.Through a comparative analysis of the current income situation in Jiangxi Province and the national income situation,it can be seen that the proportion of personal income tax in China is relatively low,and its adjustment scope and effect are limited;At present,the contradiction of income gap between urban and rural areas and between urban and rural areas is relatively prominent;Wage income is still the main object of personal income tax payment;The horizontal income gap between Jiangxi Province and the country’s urban and rural areas is small,and the growth trend is basically consistent.From the above analysis,it can be concluded that the actual scope of individual income tax payers is relatively narrow,and the comprehensive tax payment scope needs to be further expanded.By analyzing the overall redistribution effect of individual income tax through MT index and its index decomposition,it can be estimated that the Gini coefficient after tax is smaller than before tax and the progressiveness of individual income tax is strong.Individual income tax has a positive regulatory effect on income redistribution,but the lower average tax rate weakens its overall regulatory effect.After analyzing the Gini coefficient of income from different sources,it can be seen that classified collection is not conducive to the fairness of individual income tax.Then,a functional model is constructed using time series data to further study the relationship between income disparity and per capita after-tax income and average tax rate.From the functional analysis results,it can be seen that increasing the post tax per capita income of low and middleincome groups and increasing the average effective tax rate of high income groups are conducive to narrowing the income gap among residents.However,by contrast,expanding the size of middle-income groups by increasing their post tax per capita income is more conducive to narrowing the income gap.The research shows that the main reasons that affect the effect of income redistribution of personal income tax include: the small range of the actual adjustable tax base of personal income tax,the lack of diversity in expense deduction,the need for further optimization of progressive tax rate levels and levels,and the relatively lagging level of collection and management.Therefore,policy recommendations are proposed to further improve the personal income tax system and collection and management system,mainly including: optimizing the tax rate structure,using counter example methods to broaden the tax base,indexing expense deductions,and improving the level of personal income tax collection and management from multiple perspectives.