People's financial commentary: redistribution pay more attention to fairness How should the government act?

Both primary distribution and redistribution should take into account efficiency and fairness, and redistribution is more focused on fairness." "Accelerate and improve the redistribution adjustment mechanism with taxation, social security and transfer payments as the main means." Such a discourse shows the great importance the ruling party attaches to income distribution reform. A market economy, while increasing efficiency, will bring about a widening of the income distribution gap. Since the reform and opening up, our economy has made great progress, while at the same time the gap between the rich and the poor has widened. We should make full use of public *** finance to effectively redistribute income and maintain sustained economic development and social harmony and stability. Looking around the world, developed countries have redistributed income through public **** finance, including taxation, transfer payments and government spending, and have done so with great vigor. We may as well look at the situation in the United States. First of all, the United States practises a progressive tax system. Take personal income tax as an example. in 1862, President Abraham Lincoln introduced personal income tax, but it was soon outlawed by the Congress on the ground that it was unconstitutional. in 1913, the Congress passed a constitutional amendment to legalize personal income tax. Since then, the personal income tax has grown rapidly, with the top marginal rate reaching 94 percent in 1944 and later adjusted downward. During Reagan's presidency, the top marginal personal tax rate was reduced from 70% to 28%. Currently, the top rate is 35%.In 2011, personal income taxes accounted for 47% of total revenue. In addition, every state in the U.S. has a property tax, and property includes real estate and automobiles. Because of the rise in personal income taxes, property taxes have declined relatively, but remain an important source of revenue for local governments. The United States also has a high estate tax, which discourages people from transferring property to the next generation and forces each generation to be self-reliant. The U.S. government applies transfer payments to the poor. One is social security benefits. The U.S. redistributes income through the Social Security system, which collects relatively more Social Security taxes from the rich but provides relatively fewer Social Security benefits. The second is direct transfers. For example, low-income people can receive food stamps from the government to buy food. The U.S. government also provides a relatively large number of public **** products and direct services. First, there is 12 years of free and compulsory education, no fees for primary and secondary schools, subsidized lunches, and free transportation services. Second, most of the infrastructure for living is free. For example, most government-built highways are free, as are a large number of parks and recreational facilities. Third, free medical treatment for the poor. It should be noted that the gap between the rich and the poor has widened in many countries, including the United States, over the past 30 years or so. Therefore, the widening of the gap in income distribution is a worldwide phenomenon. This is related to economic globalization, as well as the efficiency-first economic thinking and policy proposals of the supply school of thought, which occupies a dominant position. At present, many countries seek to narrow the gap between the rich and the poor. Like other countries, our country also redistributes income through taxation, transfer payments and public **** spending to narrow the gap between the rich and the poor, but on the whole, it is not strong enough. None of our major taxes are progressive and cannot effectively regulate income redistribution. Value-added tax (VAT) is the largest tax in China, accounting for 27% of total tax revenue in 2011. Sales tax accounted for 15.2 % of total tax revenue. Consumption tax accounted for 7.7 % and consumption tax and VAT on imported goods accounted for 15.1 %. Together they account for 65% of total tax revenue. Since these taxes are transferred into prices, consumers pay the same price regardless of their income. Therefore, these taxes are regressive. Personal income taxes are progressive, but their share of tax revenues is very small, accounting for only 6.75 percent of total tax revenues in 2011. In addition, the country has no direct taxes such as personal property, estate, or gift taxes. Our current tax system favors savings and economic growth and is not conducive to redistribution. Indirect taxes, such as value-added taxes, are relatively easy to collect from businesses. Businesses then add the tax to prices, invisible to consumers. In China, the marginal rate of personal income tax, which is a direct tax, is already as high as 45%, and it is difficult to go higher. Too high is not conducive to attracting talent, human capital accumulation and economic development. In addition, the provision of public **** products in China is insufficient. Infrastructure closely related to people's daily lives is still backward, and the quantity of public **** products is insufficient. As we all know, low-income people need public **** goods most. Over the years, China has done a lot in terms of transfer payments to low-income people, for example, subsidizing rural cooperative medical care, subsidizing medical insurance for urban residents, subsidizing rural pension insurance, and granting a small amount of pension to farmers, etc., all of which are conducive to fair distribution. However, the areas of transfer payments to low-income people are limited and small in scale. Therefore, we need to make full use of public **** finance to better regulate income distribution. In the area of taxation, the first step is to strengthen the supervision of income tax collection to prevent loopholes and gradually increase the share of income tax in total tax revenue. Secondly, personal property tax should be levied. While levying taxes, the protection of personal property should also be increased. Thirdly, estate tax and gift tax should be introduced in due course. However, according to international experience, the scale of the latter two taxes is also limited. Since it is difficult to increase the progressivity of the tax system for a while, the most feasible thing to do at present is to increase the provision of public **** goods. The first is to strengthen the construction of public **** infrastructure, such as: developing public **** transportation to reduce the cost of travel for the poor; increasing investment in the construction of roads in rural areas and the central and western parts of the country; opening some parks, providing cultural and recreational facilities free of charge; and improving public **** sanitation facilities. The second is to increase public **** services, such as the development of 12-year compulsory education. Thirdly, we should increase government expenditure on medical and health care to provide the most basic medical and health care services. At the same time, we should increase the transfer payments to the low-income class, expand the areas and scale of transfer payments, and further favor the low-income group in terms of social security. For example, basic livelihood protection should be provided to low-income people, minimum old-age protection should be provided, low-cost housing or housing subsidies should be provided, unemployment relief should be provided, and so on. While increasing our redistribution efforts, we must also be soberly aware that there is still a big gap between our economic level and that of the developed countries, and that development is still the top priority. We cannot neglect efficiency and the protection of investment and labor incentives. (The author is the director of the Peking University China public **** financial research center, director of the Department of Finance, professor) Past financial comment: the people's financial comment: civil servants need to monetize the standardization of salary increases