Since the reform and opening up, China's great achievements in economic development and other fields have benefited from the establishment and improvement of the socialist market economy system. At the same time, with the continuous improvement of social productivity, the socialized production system is becoming increasingly complex. It is necessary to better coordinate the relationship between local and systemic aspects, effectively maintain the orderly operation of socialized production, and enhance its organization, which has become an inevitable requirement for institutional innovation. The system concept is an important methodology that emphasizes analyzing and solving problems from the perspective of the overall, interrelated, and collaborative nature of things. The fiscal and taxation system deeply reflects the distribution relationship between the state and members of society. According to the theoretical principle of production determining distribution, it has a very close internal logic and mutual relationship with the socialist market economy system. On the one hand, the reform of the fiscal and taxation system must be adapted to the changes in production relations. In the process of industrialization, the value creation caused by socialized production has become an important source for the state to participate in social distribution. The elevated status of taxes such as turnover tax and income tax in tax revenue deeply reflects the changes in distribution relationships in socialized production. The changes in production relations are also significantly influenced by the fiscal and taxation system. The state supports the smooth operation of the property rights system, division of labor system, and circulation system through the allocation of financial resources, enabling continuous improvement and enhancement of socialized production efficiency. At the same time, the state carries out resource allocation in the areas of initial distribution, redistribution, and tertiary distribution through the fiscal and taxation system, forming coordinated and supporting institutional arrangements, effectively enhancing the organized nature of socialized production and ensuring its orderly operation. The position of fiscal and taxation system reform in economic system reform can be seen from historical experience. Every major economic development achievement in China is often closely related to major breakthroughs in socialized production organization. Behind these breakthroughs are a series of institutional innovations, one of which is the fiscal and taxation system. To gain a deeper understanding of the role and changing patterns of the fiscal and taxation system in China's economic system reform process, there is no fixed theoretical experience. Instead, it is necessary to closely grasp the interaction between productive forces and production relations from the practice of reform and development, and return to the judgment of the reform process and socialized production characteristics in different periods. On the one hand, economic system reform first originated in the field of property rights system, and the reform of fiscal and taxation system marks a significant breakthrough in property rights system reform. The property rights system is one of the core systems of the market economy system, and the reform and innovation in this field provide micro subjects with more predictable and stable autonomy, laying the foundation for fully stimulating the development vitality of micro subjects. After the reform and opening up, the changes in the property rights system have granted appropriate property rights to micro entities such as state-owned enterprises, fundamentally changing the distribution relationship between the state and micro entities, shifting from profit distribution to tax distribution. In the 1980s, China implemented two-step reforms such as "profit to tax" and tax profit separation, and formulated and passed the "Personal Income Tax Law of the People's Republic of China". On the other hand, we are always able to actively promote the reform of the fiscal and taxation system in a timely manner at different stages of reform, ensuring that the fiscal and taxation system always adapts to the process of socialist market economy system reform. The fiscal management system reform of the tax sharing system implemented from 1993 to 1994 greatly enhanced the central government's ability to coordinate financial resources and carry out macroeconomic regulation, playing a crucial supporting and guaranteeing role in building a unified national market and improving exchange and circulation efficiency. In 2002, China implemented the reform of income tax revenue sharing, which changed the previous institutional pattern of dividing central and local income tax revenue according to the affiliation of enterprises. In fact, it was also an institutional adjustment implemented to adapt to the changing social division of labor, and played a significant positive role in promoting fair market competition and building a unified national market. In order to adapt to the extension and elongation of the division of labor in the industrial chain and effectively solve the problem of repeated taxation in different links, China has continued to reform the value-added tax system, and has successively implemented reforms such as the transformation from production-oriented value-added tax to consumption oriented value-added tax and the replacement of business tax with value-added tax. The establishment of a unified value-added tax system in China will help to significantly reduce institutional transaction costs and further promote the construction of a unified national market. The key to deepening the reform of the fiscal and taxation system and achieving high-quality development lies in the comprehensive development of individuals. From the perspective of historical development, the process of modernization of human society is also a process of constantly shifting from socialized production of material elements to socialized production of human beings. While Chinese path to modernization is a people centered modernization, which insists that everything is for the people, everything depends on the people, and further strengthens the all-round development of people, which is fundamentally different from traditional modernization. In this regard, we should continue to deepen the reform of the fiscal and taxation system and establish a modern fiscal and taxation system. One is to maintain a reasonable macro tax burden level. In the future, there will be a series of significant factors that will have an impact on economic development. We must maintain a reasonable macro tax burden level to better respond to and ensure it, among which the most prominent are digitization and population aging. The rapid development of the digital economy is creating new technological conditions for comprehensive human development, and the organizational form of socialized production is being restructured. People can even directly participate in social division of labor through the internet, which is difficult to achieve in industrial society. In order to adapt to this trend of division of labor, we must correctly handle the relationship between consumption and investment, and continuously strengthen fiscal investment in new infrastructure and equalization of digital capabilities. In addition, the population structure is facing significant changes, and in actively responding to the impact and influence of population aging, it is necessary to increase investment in relevant livelihood areas. The second is to promote the optimization of the tax system structure and increase the proportion of direct taxes such as personal income tax. During the industrial society period, the exertion of human initiative and enthusiasm always relied on material factors, and industrial production remained at a relatively low level in terms of value creation efficiency. This leads to a very limited proportion of direct taxes such as personal income tax in the tax system structure. Once people's status in socialized production continues to rise, their labor will become more independent from material factors, laying the foundation for the rapid growth of direct tax revenue such as personal income tax. In fact, some new forms of digital economy that have emerged in recent years focus on strengthening the role of people in value creation, and data elements have become a new carrier for condensing labor value. At the same time, people's ability to create value is more differentiated, and increasing the proportion of direct taxes such as personal income tax can also help strengthen the regulatory role of the financial and tax system in distribution. Thirdly, the allocation of financial resources places greater emphasis on structural concepts. Adhere to the perspective of industrial structure, standardize tax preferential policies, allocate more financial resources to original innovation, basic research, and leading industries, and vigorously support micro entities to better transform and upgrade from traditional productivity to new quality productivity; Adhere to the perspective of regional structure and continuously improve the allocation pattern of financial resources that adapts to the regional economic layout and national spatial system. In accordance with the requirements of building a unified national market, it is more in line with the characteristics of regional economic development, adapts to the layout of main functional areas, and establishes and improves the corresponding public service supply system. The fourth is to better adapt to the new characteristics of digital economy development and continuously optimize the intergovernmental fiscal system. For the financial allocation issues between different regions brought about by the development of new forms of digital economy, the higher-level government should coordinate and establish a mechanism for regulating the allocation of financial resources. Based on the principle of consistency between value creation and financial allocation, a scientific, reasonable, and fair financial allocation mechanism should be constructed. Author: Jiang Zhen (Professor at the School of Applied Economics, University of Chinese Academy of Social Sciences)