The Research On Chinese Personal Income Tax Deduction

The personal income tax deductions in China are just be deducted by the government with a same quantity, while it is quite complex and complete abroad. So, it is unfair for those who gets his money through different ways. And it is inefficient for the government and taxpayers, comparing the cost against gains. Deduction can be thought as income for taxpayers, and a substitute for government's transfer payments. In addition, the taxpayer's expense deduction affects consumption, savings, investment, labor supply, the country's tax revenue and income distribution. Therefore, we must reform the existing approach of deduction.For the comprehensive deduction reform, this article draws on a variety of modes related expense deduction theory, and then summed up the result that the expense deduction and the state of the economy, administration, information technology degree, tax compliance, the proportion of personal income tax has a relationship. Next, this paper demonstrates our existing deduction way is unreasonable in the view of equity and efficiency principles. Thus, the individual tax deduction must be deducted comprehensively. This paper suggests that the deduction should be calculated itemized and integrated, meanwhile living expenses, medical expenses, education costs and other special costs should be considered. Living costs can be deducted twice, the state standard and local standard. Medical expenses can be deducted by 6% of total revenue. Education deduction can be used more for the vulnerable groups. As special deduction costs, a lot of suggestions have been given by this paper. To implement the new way successfully, this article gives some reforming advices, with the wish make our personal income tax deduction mode more rational and build a better tax environment.