Research On The Impact Of Individual Income Tax Reform On Residents’ Welfare Level

With the continuous development of China’s economy,the income distribution gap between residents continues to increase.As a powerful weapon to improve income distribution in China’s modern tax system,personal income tax has assumed an important role in adjusting the gap between rich and poor and improving people’s livelihood.At the same time,the country has begun to continuously advocate the development concept of "putting the people at the center",taking improving the happiness index of residents as a key development direction.Whether the tax policy reform can play its role in promoting the level of residents’ welfare has become a question currently being discussed by more and more scholars.To explore whether this individual income tax reform has played a role in reducing the living burden of residents and improving their income level.From the perspective of welfare,this article focuses on individual residents,classifies residents by income,and discusses the welfare changes of different income groups in the context of the personal income tax reform.Using the CFPS data for 2018 and 2020,the fuzzy comprehensive evaluation method and the general equilibrium model are used to calculate the welfare level of individual residents before and after the individual income tax reform,study the degree of change in the welfare of residents before and after the individual income tax reform,and analyze the impact of various specific measures to implement the individual income tax reform on the individual welfare level of residents.This article uses factor analysis to classify the indicators that personal income tax may have an impact on residents’ welfare.Firstly,it uses fuzzy comprehensive evaluation method to measure the changes in the size of residents’ welfare indicators before and after the personal income tax reform,and analyzes the changes in the size of welfare indicators for different income groups at the income level,social level,and life level before and after the personal income tax reform,From the analysis of welfare indicators,it can be seen that the reform of individual income tax has a significant positive impact on the four welfare functional indicators of residents’ income level,job evaluation,social evaluation,and job satisfaction.However,after the reform of individual income tax,the membership value of the functional indicator of life security has decreased.Secondly,on the basis of obtaining the change in the level of residents’ welfare,we empirically study the impact of individual income tax reform on the welfare level of residents of different income groups from the perspective of heterogeneity using a general equilibrium model.The research results show that this individual income tax reform can effectively improve the overall welfare of residents,while the welfare level of low and middle-income groups and low-income groups has decreased in this tax reform,The increase in welfare is positively correlated with residents’ income.When analyzing the welfare impact of various specific measures of individual income tax reform,it is found that changes in special additional deductions and exemptions have a significant impact on the welfare level of residents,but changes in progressive tax rates can lead to a decline in the overall welfare level of residents.Based on this,this article argues that the scope of special additional deduction should be further expanded during the implementation of individual income tax reform,increase attention to the welfare losses of low-income groups,and ensure that the policy implementation process can effectively promote the equalization of welfare for all income groups in society.