Tax Unit Of Individual Income Taxation

Personal Income Tax is a taxation that imposed on the whole income of individual (natural person). Individual Income Tax law of the People's Republic of China was founded in 1980, which has three revisions. The personal income tax revenue increased steadily in the past twenty years. And it has already become the fourth major tax of China now.The payment unit of Personal Income Tax declaration could be one family or one individual person. And there are specific standards for different types of taxpayer. Therefore, how to determinate taxpayer is one essential issue of personal income tax law.Nowadays, according to the individual income tax law of People's Republic of China, the taxpayer is defined as one individual person. The benefits of this approach are the representation of the neutrality of marriage and easy operability. While the disadvantages are the contradiction of the principle, which emphasis that payment is based on one's economic ability, and overlook the diversity of different families with the same incoming, such as, the number of parents need to be supported and economic situation. The deduction absence of special factor is contrary to the equal survive right.In many countries, family is the payment unit of personal income tax, or the family situation is considered while the individual person is the declarer. Every family member's income and expenditure is calculated according to this method. Thus it benefits the equality of taxation burden. However, it may probably decline women's willing of work, especially in the low class family. Moreover, it requires a high level tax system and social environment.The situation of our country is unique, and personal income tax system is weakly supported. Because our family structure is more complex than western family structure, and our taxation structure is incomplete and levy system is unsound. Hence, we have to summarize experience of other countries and perfect our taxation system by their advantaged method, in the process of reform our taxation system.There are four chapters in this thesis. The first chapter introduces the development situation of personal income tax in China. In 2007,the total personal income tax is 3186 RMB, which is of 7% of total revenue. First, the duration of increase is benefited from the growth of people's income caused by the economic development. Second, in the condition of higher standard of personal allowance, every tax authorities are devoted to perfect the monitoring system, and increase management power of personal income tax in high income industry.China is Scheduler income tax now, which defines 11 types of personal income with corresponding tax rate, based on different income sources. However, people with distinct family burden have to pay the same tax. And this is unfair and without humanization.The second chapter is about the classification of personal income tax declaration system. There are three types of payment unit of personal income tax, Personal, Family based and Grouping tax rate. And both the advantages and disadvantages of the three types are illustrated in this chapter. And strengths analysis of using family as the payment unit. This type of tax system considers personal income, moreover, it highlights the whole family income level and expenditure scale. It coincides with the division of tax system made by capital movement in the process of society production. It also coincides with the efficiency standard of tax system, and is a system which distorts the choice between work and rest on the lowest level, and help to release employment pressure in China. Family based income tax could shorten the income gap between families as well. It greatly coincides with the variety of personal income in the modern world, and makes the personal income tax more effective. Though there should be some certain selection standard of payment unit, in the operational condition, the contradiction among those standards is prevalent. Hence, tax declaration system should be selected according to nation's distinct condition.The third chapter is about the comparison of personal income tax payment unit between different nations, especially United State of America, United Kingdom, France, and Japan. The US government defines the family as the payment unit, and uses Grouping tax rate. The French government requires the couple to declare the personal income tax together, and the rate is calculated on family coefficient. And this embody the principle of pay tax according to their ability. Family population is considered in Japanese tax threshold, moreover, there are many exemption and tax credit in the law.The fourth chapter is about the feasibility analysis and policy proposal of Family based personal income tax in China. First, there are several requirements of that: using general income tax system or mixed income tax system; strong power of tax administration in taxation and basic data awareness of taxpayer; high level of legal system of construction, strong tax consciousness of citizen, and clear property declaration. However, China lacks the three conditions above. And it will take a long time to obtain them. Therefore, tax administration should perfect the environment as soon as possible. For instance, they can strengthen personal income monitoring mechanism to make personal income and expense standard and credible, and carry out and improve real name deposit system, and promote tax information construction, and aggrandize propaganda to enhance citizen taxation awareness as well.