Research On The Fairness Of Personal Income Tax In China

With the transformation of major social contradictions in China,the issue of fairness has increasingly become the focus of economic and social attention.Fairness is not only the basic requirement of a virtuous circle and the healthy development of the market,but also the basic goal of government intervention.As the main source of government revenue,tax fairness is of great significance to the smooth implementation of the tax system itself and the realization of tax functions.Compared with indirect tax,direct tax takes citizen's income or wealth as the tax object,which is difficult to transfer.For taxpayers,the pain of tax burden is the most obvious,and the effect of adjusting income distribution is the most direct.so the direct tax bears more fairness expectation.Now,China's social equity is not good,the direct tax system is lacking,so the fairness of personal income tax(PIT)is particularly prominent.At present,the share of PIT in China's tax revenue is limited.this situation is in sharp contrast to the widespread concern caused by PIT.It must be said that the appeal of public opinion for fairness is an important contributing factor to the frequent revision of PIT in China.In 2018,China revised the PIT law for the seventh time.The breadth and depth of this amendment are the highest.In addition to tax reduction,the embodiment of the PIT fairness is also different from past.This paper makes a comprehensive analysis of the fairness of PIT in China.Starting from the fairness definition and combining with the mainstream fairness theory in academic circles,this paper points out that fairness includes three dimensions: right fairness,opportunity fairness and result fairness.tax fairness researchs also focuses on these three dimensions.tax fairness is the combination of benefit principle and ability principle.Specific to the tax system,this paper focuses on tax opportunity fairness,result fairness and equal tax payment.Tax opportunity fairness means that taxation should fully consider the differences of taxpayers' survival and development,take care of the individual's feasible ability,and moderately increase the tax burden of the individual's extra income due to the advantageous environment.Result fairness requires personal income tax to follow the principle of ability and play a positive role in regulating income distribution.Equal pay taxes in the fairness of tax rights requires taxpayers to face tax laws equally and pay taxes in full according to law.This paper focuses on the fairness of personal income tax in China from two perspectives: tax design and tax system effect.The basic conclusions are as follows:From the perspective of tax design,both tax base and tax rate are the combination of tax fairness and efficiency.However,the gradual diversified tax deduction and progressive tax rate design reflect the strong orientation of opportunity fairness and result fairness.The structure progressiveness can further explain that with the continuous improvement of people's income level,the progressiveness of tax design is constantly released.fair tax system implementation is based on tax-related parties fully fulfill their rights and obligations.From the perspective of opportunity fairness,this paper uses the unfair Gini coefficient and the unfair MLD index as the measurement index.The results show that personal income tax can reduce the unfair Gini coefficient and unfair MLD index among urban employees,that is,personal income tax has a positive regulatory effect on opportunity inequality.Under the new tax law,the alleviation of opportunity inequality by personal income tax is restrained,and the introduction of special additional deduction can fully take care of the differences among individuals,so the performance of opportunity equity effect of personal income tax after this round of tax reform is more complex.From the perspective of result fairness,This paper studies from the macro and micro levels based on the perspective of distribution,which shows that the principle of tax ability has better performance in the micro level than in the macro level,and the redistribution effect of personal income tax under the new tax law needs to be further strengthened.First,in recent years,the tax burden in China is not heavy,whether it is wage income tax,business income tax or capital income tax.Comparatively speaking,the average tax rate of wage income tax is the highest,followed by capital income tax,and the lowest is operating income tax.The tax burden of taxpayers is obviously different due to different sources of income,and the principle of tax according to ability has not been well practiced.Second,using CHFS data to calculate,the results show that China's personal income tax has a strong progressiveness,and the progressiveness of personal income tax has been enhanced after the latest round of tax reform.Under the new tax law,the progressiveness of personal income tax is mainly reflected in the individual level,which mainly depends on the exemption system.At present,the role of special additional deduction is relatively weak.Third,the calculation results of the direct income redistribution effect of personal income tax show that personal income tax can effectively regulate the income inequality among the employees,After the latest round of tax reform,the income redistribution effect of personal income tax has been weakened.UL decomposition results show that vertical equity plays an absolute dominant role in the redistribution effect of personal income tax.Combined with the relationship between vertical equity and effective progressivity,it is found that the lower average tax rate weakens the moderating effect of progressiveness on income redistribution.From the perspective of equal pay taxes requirements under right fairness,the more unequal taxpayers pay taxes,the more common the phenomenon of tax non-compliance,and the more serious the tax loss.And tax loss hinders the opportunity fariness and result fariness.According to the calculation and analysis,there is a common phenomenon of tax loss in China's personal income tax: in 2018,wage income tax loss rate is between 25% and 30%,and self-employment tax rate loss is over 70%.Under the influence of efficiency-oriented policy and limited collection and management technology,capital income tax loss is also serious.In order to achieve tax fairness,this paper puts forward the following suggestions: First,we should rationally understand the fairness of personal income tax.under the domestic and international background,there are both opportunities and challenges to promote PIT the fairness.In addition,to improve the PIT fairness,we should give consideration to the three fairness,and we should not discriminate against one another.Secondly,we should further standardize the rights and obligations of all parties involved in PIT in China.We should respect taxpayers' rights and highlight fiscal and taxation democracy.we should also improve tax administration and strengthen tax service.We should cultivate taxpayers' tax awareness and improve tax compliance as well.Finally,PIT structure in China needs to be further improved,including improving tax collection way,optimizing special additional deductions,optimizing tax rate structure and standardizing preferential tax policies.On the whole,this paper analyzes the PIT fairness of personal income tax from the three dimensions,thus enriching the relevant theories of PIT fairness.In the use of empirical methods,combined with the latest published macro and micro data,based on the existing mature methods and moderately expanded to make it more suitable for the needs of this study,so as to improve the depth and breadth of research.In addition,in 2018,China made the most in-depth tax revision so far.Although it responded to people's demands for tax fairness,it is not difficult to find that the more direct purpose of the reform is to reduce taxpayers' tax burden.From the perspective of fairness,China's PIT reform still has a long way.The research in this paper can provide targeted countermeasures and suggestions for the medium and long-term reform of personal income tax in China.Surely,there are still many shortcomings in this study,which need to be overcome in the follow-up study.