Study The Form Of Personal Income Tax Rate

Relating many issues in the area of tax policy and tax technique, the tax rate form of individual income tax is of much significance for the improvement of policies concerning individual income tax. Basing on the broad material, employing all the theory possessed, considering practice of other countries, this paper explores the matters of tax rate form of individual income tax. The tax rate form of individual income tax includes three parts: firstly, the choice between the proportional tax rate and the progressive tax rate; secondly, the choice about the pattern of tax rate structure; thirdly, the choice with regard to the progressive path of tax rate.This paper is structured into five parts. The first part introduces the selection between the proportional tax rate and the progressive tax rate. By systematical analyzing of the different theories of the proportional tax rate and the progressive taxrate, it comes to a conclusion——the individual income tax should adopts theprogressive tax rate form.The author believes that from the perspective of fairness, "Ability Theory" is the scientific basis which determines the form of individual income tax. "Ability Theory", that is, the ability-to-pay principle means that the taxpayers ought to shoulder the tax burden according their abilities. As the standard measuring the taxpayer's ability, income has two traits: firstly, accompanying the income's rise, individual's ability increase. Also, the proportion of the enhancement in ability is larger than the proportion of the enhancement in income. Secondly, it will sacrifice less for high-income taxpayers comparing with low-income taxpayers when they pay the same tax. So, if only we implement progressive tax, and levy the higher tax rate to high-income taxpayers, it will accord with the equity-principle.Besides, the efficiency principle is another important index for judging the tax system. Progressive tax rate has the function of "internal stabilizer" which can regulate economic development automatically. An a kind of direct tax, individual...