Income Distribution and Government Tax Revenues						<bold>：</bold>An Explanation of China’s Wealthy Government

Li Zilian; Wang Aimin; Li Xiao

doi:doi:10.16538/j.cnki.jsufe.2017.02.002

Abstract

The degree of the richness in China’s government, which is measured by the share of government tax revenues in gross national income, is basically determined by the distribution model among residents. It is proved by some points as the follows: firstly, income inequality, the ration of different tax rates in the progressive rate institution and income threshold in different tax grades are important determinants of government tax revenue scale; secondly, the progressive tax institution and benefit sharing model of redistribution make the proportion of government tax revenues in the gross national income rise effectively, even if the income gap between residents expands or not, which is the reason for the formation of the wealthy government; lastly, spatial difference exists in the effect of income inequality on government tax revenues: the rise in the proportion of provincial governments in Central China is related to the expansion of income gap while the increase in provincial government tax revenues in Eastern China and Western China is due to the improvement of income distribution. Therefore, to deepen the reform of income distribution, we should not only raise the tax rates and the income threshold, but also continue to take the benefit-sharing redistribution to realize the constant rise in tax revenues and increasingly narrow the income gap.