Abstract: From the middle of the 20th century to the 1980’s, Japan improved gradually the first income distribution system that taking the possession of wealth among the people as the base, stable employment as the core, the minimum wage as the security, the income multiplier as the aim. In the process of redistribution, it has formed the unified balanced fiscal system, direct taxled system and social security system with the feature of insurance, the highamount progressive income tax of classification and grading, and the national social security system. Through the effective supply of the income distribution system, Japan has created the equality myth of “all one hundred million national belonging to the middle class”, which successfully crossed the “middleincome trap” among the ranks of highincome countries. The successful experience of Japan has important inspiration and reference for China with facing residents’ income disparity widening and risk of falling into a “middleincome trap”.

Key words: institutional supply, income disparity, middleincome trap, Japan