Capital income driving income inequality in China, tax reforms crucial.
The study looked at how different types of income affect inequality in China from 2010 to 2018. They found that capital income, like investments, is a big reason for income inequality and its impact is growing. Income tax helps reduce overall inequality, but transfer payments can make income composition inequality worse. As capital income becomes more important, the income gap could widen. To address this, they suggest improving income tax laws and making sure fiscal policies help balance income types.