Experts call for wide-ranging reforms to tackle income inequality (2)

In China, only 23 percent belong to the middle-income group, whereas in developed economies, the percentage is more than 40 percent.

Another measurement is the portion of household income in the whole national income system. Wang said 66 percent of the national income went to households and the rest went to corporations and the government in 1992. In 2008, households' portion fell to 57.23 percent. After taxation, households' portion dropped to 57.11 percent.

"This showed that taxation not only failed to help residents grab a larger portion of the national wealth, but on the contrary, reduced their share," Wang said.

Other researchers pointed out the same inequality exists in other key measurements, such as the income disparity between different occupations, regions and urban and rural residents.

"The inequality of income distribution is basically reflected by ratios. So reform essentially aims to adjust these ratios. It is best to include a quantitative target in reform design," said Liu Hao, deputy director of the employment and income distribution department of the NDRC, China's top economic planning agency.

More equal society

Despite some disagreements, scholars and officials agree on one thing: Income inequality is hampering the growth of China's consumption and its shift from an investment-driven economy to a consumption-driven one. Income inequality also has profound political implications: The lack of a sizable middle-income group will affect social stability.

The problem is how to enlarge China's middle-income group.

An improved tax system has been proposed as a solution. According to some experts, a well-designed tax system assists in wealth redistribution by transferring resources from the rich to the needy.

Gan Li, director of the economics department at the Southwestern University of Finance and Economics, said the Gini coefficient, a measurement of income inequality, was remarkably lower in developed economies with a mature tax system.

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