Regulation Of High-Income Individuals' Non-compliance With Personal Income Tax In China

Since the beginning of 2006, State Administration of Taxation requiring an annual income of more than 12 million high-income individuals to declare taxes. However, according to estimates, about 80% of high income earners has not declared; If we consider those who have been declared but the number of inaccurate reporting, we can see that our high level of income tax non-compliance has been very serious. High-income persons "do not tax" not only caused huge loss of revenue, and increasing inequality of income distribution. On the one hand, in our current level of tax collection, levied for both serious sources of information asymmetry, the tax authorities also seized tax evaders can not be fully and quickly. Meanwhile, there is a lack of integrity of taxpayer incentives. On the other hand, the classification of our income tax system is helpful in high-income individuals from a wide range of characteristics of income's sources to avoid tax.Based on this, this paper focuses on the collection and management of policies and design of high-income tax compliance of taxpayers. The collection of different policies (such as the probability of seizures, penalties tax rate and the incentive of good faith) and the tax system design (such as changes in tax rates) on the degree of tax compliance is not obtained by actual survey data. Therefore, this paper used the simulation method by combining a questionnaire survey of high-income taxpayers to comply with the mechanism of decision-making.This study found that: (1) the higher the probability of seizures, the higher the degree of tax compliance; (2) in the case of low probability of seizures, even if the penalty rate is very high, and its impact on the rate of compliance is limited; (3) The integrity of incentives for high-income tax compliance is not the same effect; (4) given the risk of deterrence, if the reward of honest taxpayers, the taxpayer's overall compliance of the situation than there is no incentive .Major policy recommendations: First, from the choice of tax model and the optimization of these two aspects of tax discussed; Second, sound risk mechanism of deterrence, access to information from third-party mechanism to build and improve probability and improve the tax law seized penalty, increase marginal deterrence, it discussed in two aspects; Finally, build credibility incentives to reward the taxpayers of honest and dishonest taxpayers to take relevant measures to promote the rehabilitation of two aspects of its described.