Professor Yang Canming, President of ZUEL and Director of IIDPF, authored The Enlightenment and Significance of Constructing Modern Finance, Taxation and Financial System to Optimizing the The Enlightenment and Significance of Constructing Modern Finance, Taxation and Financial System to Optimizing the Income Distribution Pattern was recently published in the authoritative journal Economic Perspectives, issue 9, 2021. Against the background of the unprecedented changes in the world and the goals of the new development stage, this article explores the role of the public fiscal and financial system by fully understanding the current situation of income distribution in China and the laws of institutional evolution, and proposes a key direction for the construction of a public fiscal and financial system to optimise the pattern of income distribution.
This study concludes that the public fiscal and financial system serves to optimise the pattern of income distribution among the population through the following six mechanisms: (1) progressive taxation mechanism, a progressive income tax system will weaken the incentives of the wealthy groups to pursue high income and indirectly reduce the degree of inequality; (2) fiscal expenditure mechanism, including infrastructure investment and expenditure on people's livelihood; (3) transfer payment mechanism, as an important means of fiscal redistribution, transfer payments have a significant contribution to improving income distribution; (4) social security mechanism, which plays a significant role in building a reasonable and orderly income (5) financial inclusion mechanism, which can effectively smooth consumption, manage risks, reduce financing constraints and facilitate transactions, thus influencing a country's income distribution pattern; (6) "new technology" mechanism, under the conditions of the new development pattern, finance and The close integration of "new technologies" has become a distinctive feature of the new development landscape.
This study has drawn the following four policy insights: (1) improve the market for production factors to enhance resource mobility and make the initial distribution more equitable; (2) enhance the fiscal redistribution function and guide financial resources towards the disadvantaged groups to improve the redistribution pattern; (3) synergise fiscal and financial policies and focus on flexible policy innovation; (4) promote equalisation of educational resources to promote fair opportunities and break the two-way transmission of income and wealth inequality.
The public fiscal system is the organic integration of the public fiscal system and the modern financial system. In the face of the current macroeconomic situation and profound changes in the international landscape, and the daunting task of reform, development and stability, the public fiscal and financial system should and must be modern, synergistic and equitable in order to better serve high-quality development and ultimately achieve the goal of common prosperity.