Abstract: As the most important direct tax in China, the implementation of the reform of personal income tax not only affects the micro-economic behavior of residents, but also affects the modernization process of social governance. Based on the data of China General Social Survey (CGSS 2015), this paper conducts an empirical study of the impact of the reform of personal income tax on the modernization process of social governance by using Ordered Probit model and Probit model. The findings show that the reform of personal income tax has effectively promoted the modernization process of social governance. On the one hand, the reform of personal income tax has significantly increased the willingness of residents to pay taxes and the trust of residents in the government, which can effectively maintain social order. On the other hand, the reform of personal income tax has also promoted the willingness of residents to participate in politics and promote their political participation, which can effectively stimulate social vitality. From the perspective of specific mechanisms, the reform of personal income tax can promote the modernization process of social governance by improving residents’ perception of social fairness and government transparency. Therefore, it is necessary to establish a more fair and just personal income tax system and maintain a good social order, improve the institutionalized channels for public participation in social governance and effectively stimulate social vitality, promote the improvement of the quality and efficiency of government transparency and enhance the public’s perception of social equity and government transparency.

Key words: personal income tax, resident tax compliance, modernization of social governance, social vitality, social order