Study On The Reform Of Individual Income Tax In Family

Individual income tax has more than 30 years’ history since it was first levied in China in 1980. China adopts a classified income tax system with individual person as tax unit. Individual income tax plays an important role in collecting fiscal revenues and regulating social income distribution in the early years. However, with the development of the economy and the increase of individual income, the existing income tax system model cannot meet the requirements of social development because it fails to take the tax-bearing capacity of taxpayer’s family into consideration and thus lead to unfair tax burden. Therefore, the reform of individual income tax has become an important problem in China’s tax system reform. The taxation model with family as tax unit takes full consideration of the income and tax-bearing capacity of taxpayer’s family. It is favored by most countries because it helps to advance social equity and justice. Therefore, China should establish a classified income tax system with family as tax unit. Based on the urgency of China’s tax system reform, this theses analyzes the problems in current individual income tax system, discusses the tax pattern of individual income adopted by the developed countries, researches the feasibility of implementing new individual income tax system with family as tax unit in China, and promote some concrete suggestions based on the studies so as to reduce disparity in wealth distribution and establish a fair tax system.Besides the introduction and conclusion, the thesis is consisted of four chapters.The introduction describes the background when selecting the topic, the purpose and significance of the research, summarizes the research status of individual income tax at home and abroad; also it outlined the research method and the innovation of this paper.The first chapter is an overview of individual tax model, outlining its concepts about individual income tax model. It introduces and summarizes the features of income tax model based on individual and family unit. Additionally, it summarizes and analyzes the current collection model of individual income tax.The second chapter is the comparison of basic theory of individual tax system. Through the research of tax model of family unit in developed counties including USA, German, Japan etc. we compared the tax model, expenses deduction, taxation rate and tax collection so that we can provide positive revelation for the individualincome tax system reform.The third chapter defines the necessity and feasibility of tax model based on family unit. After studying the problems of our current individual income tax system, we find the necessity of reform of our individual income tax system. This chapter demonstrates the feasibility of income tax collection based on family unit.The forth chapter focus on the building of tax model based on family unit, and studies the problems we are facing when conducing the family based tax collection mode. Besides, it offers the details of individual income tax reform in perspective of expenses deduction, taxation rate and tax collection system.