Research On Tax Planning Under The Framework Of Behavioral Economics

As basis theories of tax planning, there is a decisive challenge from behavioral economics to mainstream economics. Integrated in individual's psychological factors ,behavioral economics has changed the judgments of value and utility from absolute to relative, and also change entirely rationality, preference justice, expected utility theory exponential discount to bounded rationality, preference inconsistent,prospect theory and hyperbolic discount. It has fundamentally realized the better explanation of expected utility theory and exponential discount.Firstly, this paper summaries tax planning in accordance with mainstream economics and behavioral economics; secondly, this paper analyzes tax planning on risk and intertemporal. All these features above imply that the achievements of risk and intertemporal can also apply to tax planning. Then, the paper takes time preference and risk preference as mainline in a creative way and gets the tax planning evaluation model based on prospect theory and hyperbolic discount. The "value function" and "weight function" in prospect theory changed the evaluation criteria from absolute to relative, and the hyperbolic discount changed the evaluation criteria from point in time to time line. In short, the model based on prospect theory and hyperbolic discount is more convincing and closer to reality.Finally, it comes to the conclusion that comparing to mainstream economics, behavior economics has the vaster and applied space on economic realm; and has stronger significance for theories and behavior of tax planning.