Research on the Relationship Between the Tax System and Alleviating Income Inequality

This paper delves into the relationship between China's tax system and the alleviation of income inequality. After achieving a moderately prosperous society, China confronts the issue of income inequality, with a Gini coefficient in 2022 higher than the international warning line. The tax system, especially personal income tax, aims to regulate income distribution, yet its current effectiveness is limited. China's tax system encompasses multiple tax categories like value - added tax, corporate income tax, and personal income tax. However, the heavy reliance on indirect taxes and loopholes in tax collection and management weaken its role in narrowing the income gap. Income inequality in China is prominent in urban - rural and industrial dimensions, with significant income disparities. The tax system exerts regulatory effects. Personal income tax, through progressive tax rates and deductions, eases income inequality. Property tax regulates wealth distribution by targeting real estate and inheritance, while consumption tax impacts different income groups' consumption through differentiated tax rates.