Calculation of Effects of the Individual income Tax – Social Assistance Policy Mode Towards Different Income Classes

Abstract

 In the western countries, the individual income tax referred to as "Robin Hood tax", is that the individual income tax "Robin Hood" like Robin Hood, and social relief is the main content of the social security, low-income is difficult class to maintain basic living standard "last line of defence", which is the important tool of government regulation and promoting fair income distribution. In this paper, a model of individual income tax and social relief policy is constructed. Firstly, the income distribution and the Gini coefficient of different income groups in cities and towns are measured. On this basis, the changes of income distribution and the Gini coefficient of different income groups after they receive social relief income from the government are calculated. So, we can get the comprehensive effect of the government's individual income tax - social relief policy mode. The analysis results show that the individual income tax - social relief policy model has played a positive role in narrowing the income gap, but the effect is relatively small. The research believes that the adjustment and improvement of individual income tax policy and the government's targeted increase of social relief expenditure are helpful to the goal of adjusting the income distribution gap.