As an important tool for regulating income distribution, fiscal affairs is of great significance for the rational distribution of wealth and the realization of the ultimate goal of common prosperity. This paper analyzes the current situation of income distribution in China from the perspective of fiscal revenue and expenditure, focusing on indicators such as per capita GDP, Engel coefficient, per capita disposable income ratio of urban and rural residents, and per capita consumption-expenditure ratio of urban and rural residents; On the other hand, the adjustment effect of fiscal revenue and expenditure in the process of income distribution is analyzed around indicators such as per capita disposable income, per capita disposable wage income, and per capita consumption expenditure. Then, the article proposes that China’s fiscal policy still has problems such as the excessive proportion of indirect taxes, insufficient public expenditure, the lack of guarantee in the efficiency of transfer payments, and so on. Therefore, this paper puts forward the following suggestions to explore the path to common prosperity. First of all, government departments should optimize China’s tax structure by increasing the proportion of direct taxes and strengthening the monitoring of the flow of goods after indirect taxes. Secondly, it is necessary to narrow the gap between regions as well as between urban and rural areas in terms of the distribution of educational resources. Besides, it is of great necessity to improve the quality of employment via tax system reform. Finally, the government should do a good job in macroeconomic regulation and control to promote coordinated economic development.