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Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China

Received: 18 July 2018    Accepted:     Published: 19 July 2018
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Abstract

The government in China carried out the personal income tax reforms in 2006, 2008, 2011 respectively, which focused on increasing deductions and reducing the tax rate brackets for wages and salaries. Using the survey data of the Urban Household of Income and Asset of 2013 from China Household Income Project, this paper will examine the impact of income tax reform for wages and salaries on income redistribution. The conclusion is that the personal income tax reforms are not efficient at improving income redistribution in China, but instead exaggerate the gap between individuals’ tax burden of their wage and other income sources.

DOI 10.11648/j.ss.20180703.16
Published in Social Sciences (Volume 7, Issue 3, June 2018)
Page(s) 146-151
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Personal Income Tax Reform, Income Redistribution, Gini Index

References
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[3] Guiquan Cao, Xiaofeng Qiu, “On the Reform of Exemption System of Personal Income Tax in China”, Tianjin University Journal, Vol 3, 2016, pp. 217-223.
[4] Zhian Yang, Jin Guo, “Personal Income Tax Reform from perspective of Distribution Equality”, Taxation Research, Vol12, 2011, pp. 23-27.
[5] Jing Xu, Ximing Yue, “How does Tax System Inequality Affect Income Distribution?”, Economic Perspectives, Vol 6, 2014, pp. 60-68.
[6] Hua Li, Lingxuan Zhu, “The Equality Effect of Wage Income Tax and its Reform: An Empirical Test Based on Kakwani Index”, Contemporary Finance and Economics, Vol 2, 2016, pp. 33-42.
[7] Jiandong Chen, Yunfang Xu, Yinyin Wu, Tao Yao, “Design of Tax Rate and Tax Rate Bracket for Personal Income Tax: Based on Income Distribution Function”, Taxation Research, Vol 3, 2014, pp. 34-40.
[8] Musgrave R. A., Thin Tun, “Income Tax Progression, 1929-48”, The Journal of Political Economy, Vol 56 (6), 1948, pp. 498-514.
[9] Lan Zhang, Ganna Zhou, “The Progressivity of the Personal Income Tax and the Calculation of Redistribution effect”, Tax Research, Vol1, 2018, pp. 53-58.
[10] Kakwani Nanak C, “On the Measurement of Tax Progressivity and Redistributive Effect of Taxes with Applications to Horizontal and Vertical Equity”, Advances in Econometrics, Vol 3, 1984, pp. 149-168.
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[14] James Alm, Fitzroy Lee, Sally Wallace, “How fair? Change in federal income taxation and the distribution of income, 1978-1998”, Journal of Policy Analysis and Management, Vol 24 (1), 1995, pp. 5-22.
[15] Xiaolu Wang. “Off-the-books income extends income gap among residents”, China Reform, Vol 7, 2017, pp. 9-13.
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[17] Xinyi Zhou, Feng Gong, “Income Redistribution Effect of China’s Individual Income Taxation from an open Perspective: Measurement, Simulation and Tax System Design”, Asia-pacific Economic Review, Vol2, 2018, pp. 114-123.
Author Information
  • Finance and Accounting Research Center, Fujian Jiangxia University, Fuzhou, China

  • Accounting School, Fujian Jiangxia University, Fuzhou, China

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    Jing Xue, Li Lin. (2018). Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China. Social Sciences, 7(3), 146-151. https://doi.org/10.11648/j.ss.20180703.16

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    ACS Style

    Jing Xue; Li Lin. Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China. Soc. Sci. 2018, 7(3), 146-151. doi: 10.11648/j.ss.20180703.16

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    AMA Style

    Jing Xue, Li Lin. Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China. Soc Sci. 2018;7(3):146-151. doi: 10.11648/j.ss.20180703.16

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  • @article{10.11648/j.ss.20180703.16,
      author = {Jing Xue and Li Lin},
      title = {Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China},
      journal = {Social Sciences},
      volume = {7},
      number = {3},
      pages = {146-151},
      doi = {10.11648/j.ss.20180703.16},
      url = {https://doi.org/10.11648/j.ss.20180703.16},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ss.20180703.16},
      abstract = {The government in China carried out the personal income tax reforms in 2006, 2008, 2011 respectively, which focused on increasing deductions and reducing the tax rate brackets for wages and salaries. Using the survey data of the Urban Household of Income and Asset of 2013 from China Household Income Project, this paper will examine the impact of income tax reform for wages and salaries on income redistribution. The conclusion is that the personal income tax reforms are not efficient at improving income redistribution in China, but instead exaggerate the gap between individuals’ tax burden of their wage and other income sources.},
     year = {2018}
    }
    

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    T1  - Analysis of the Impact of the Personal Income Tax Reform for Wages and Salaries on Income Redistribution in China
    AU  - Jing Xue
    AU  - Li Lin
    Y1  - 2018/07/19
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    UR  - https://doi.org/10.11648/j.ss.20180703.16
    AB  - The government in China carried out the personal income tax reforms in 2006, 2008, 2011 respectively, which focused on increasing deductions and reducing the tax rate brackets for wages and salaries. Using the survey data of the Urban Household of Income and Asset of 2013 from China Household Income Project, this paper will examine the impact of income tax reform for wages and salaries on income redistribution. The conclusion is that the personal income tax reforms are not efficient at improving income redistribution in China, but instead exaggerate the gap between individuals’ tax burden of their wage and other income sources.
    VL  - 7
    IS  - 3
    ER  - 

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