Weakened Redistributive Effects of Personal Income Tax in China
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| Title | Weakened Redistributive Effects of Personal Income Tax in China
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| Author | Yue Ximing,Xu Jing,Liu Qian,Ding Sheng and Dong Lijuan |
| Organization | Renmin University of China |
| Email | ximing1965@yahoo.com.cn; yue@ruc.edu.cn; |
| Key Words | personal income tax; redistributive effects; progressivity; effective rate of tax |
| Abstract | Objective of this study is to evaluate redistributive effects of personal income tax implemented last September in China. We decompose, for the first time, the MT index by income components, in order to investigate deduction and rate of tax of each itemized taxable income component on redistributive role of the personal income tax as a whole. Main conclusion from this study includes that while the reform increased progressivity, it reduced effective rate of tax and, eventually, weakened redistributive role of the personal income tax, and that given deductions and rates of tax for other taxable income components constant, raising deduction of wage and salary (dominant component of the taxable income) increases the progressivity of the total personal income tax first, and reduce it then. |
| Serial Number | WP277 |
| Time | 2012-06-12 |
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