A Study On Transforming The Mode Of Existing Classified Income Tax System

Personal income tax is a tax that is levied on the taxable income of individuals. It embodies the relation of collecting and paying between a sovereign state and its residents and non-residents within the state's jurisdiction. It is commonly used by most countries in the world. At present, the system of personal income tax can be generally divided into three kinds: the mode of classified income tax system, the mode of comprehensive income tax system and the mode of mixed income tax system. The mode of classified income tax system is used in China now. It is simple and easy to control the sources of taxation. It has some advantages in tax collection and tax inspection. The mode of classified income tax system has had played an important role in organizing financial income and adjusting personal income distribution in more than 10 years tax practice of our country. However, as the mode of classified income tax system makes it impossible to collect tax according to ability-to-pay principle of taxation, it is hard to reflect tax fairness and the reasonable burden of taxpayers and it is easy to increase the chance of tax avoidance. It is gradually not suitable for the current situation of society and economy development in China. Therefore, it is necessary to study how to transform the mode of classified income tax system. In this paper, I introduce the basic situation of the mode of classified income tax system, enumerate and analyze the existing problems. So it is urgent to reform on it. Then I discuss the theoretical and practical basis of the mode of mixed income tax system. Finally, I bring forward some suggestions on the establishment of the mode of mixed income tax system, and give some feasible ways to transform the mode of classified income tax system of China.