This paper studies the impact of people's livelihood fiscal expenditure on urban-rural income inequality from the perspective of fiscal decentralization, and then puts forward the hypothesis that people's livelihood fiscal expenditure may affect urban-rural income inequality. With the government targets to gradually shift "social welfare maximization", fiscal policy with a characteristic "rural bias", the people's livelihood fiscal expenditure can effectively reduce the urban-rural income into inequality. Finally, the paper puts forward corresponding suggestions based on the conclusions drawn. In this paper the conclusions and recommendations of the new round of national fiscal decentralization reforms and promote social equity and reduce urban-rural income inequality is a reference intended.