Research On Improving The Personal Income Tax System From The Perspective Of Harmonious Society

It has become the most urgent task to tackle the gap between rich and poor, which is widening rapidly and the objective existence, to build a harmonious socialist society. Currently, China's reform and development are at a crucial stage, the problem of social polarization between rich and poor, if not well solved, will lead to social unrest and economic retreat, and will ruin the results of reform. Income distribution system not only have practical impact to social stability, but also deeply impact national economic development. It can be said that income distribution has become the important key to crack the various contradictions in current economic operations. Income redistribution is primary means to narrow the gap between rich and poor at this stage, and tax is the primary means of income redistribution. Therefore, the research on establishment of a fair system for personal income tax has become one of the focuses to bridge the gap between rich and poor. This paper aims to improve the regulatory function of personal income tax and to address the widening gap between rich and poor from the perspective of redistribution, which is of great significance to the building of harmonious society with fairness and justice.This paper is divided into three parts, the introduction, the body and the conclusions. Introduction talks about the origin of the research, the current status and methods of domestic and international researches on personal income tax reform, and the innovations in this paper. The body is also divided into three parts. The first part elaborates the basic theories of harmonious society and personal income tax system from three aspects including harmonious society theory, the analysis of wealth gap and outline of personal income tax. The second part analyzes China's current tax system of personal income, mainly focused on the reform process, the existing problems and the reasons for the loss. The third part puts forward six tactics to improve the personal income tax system from the perspective of harmonious society, i.e., the establishment of the exemption adaption mechanism for wages and salaries, the introduction of estate and gift tax, the change of six items from using proportional tax rate into applying progressive tax rate in excess of specific amount, implementation of fair-oriented personal income tax preferential policies, reduction of the tax rate level and the maximum marginal tax rate, establishment of a good tax collection and management mechanism.This paper has proposed the mechanism of exemption, adapting to the level and changes of economic development, for wages and salaries, to avoid the trouble of needing to determine the exemption amount through the legal process continuously with the continuous improve of living standard. The paper has advised to levy personal income tax when stock properties become flow assets, i.e., the introduction of estate and gift tax item, which is helpful to attain social equity and to eliminate the phenomenon that the rich are rich forever. It is in line with the fairness principle of levying on unearned income to change proportional tax rate to progressive tax rate in excess of specific amount. The more unearned income, the higher the tax burden.