The Effect Analysis Of Personal Income Tax And Reform Suggestions Based On The Fair Principle

On June30,2011, the21stconference of the11th National People’s CongressStanding Committee passed the decision on modifying the Personal Income Tax Law,which adjusted the current personal income tax system. The starting point is to makethe personal income tax system better adapt to the current economic and socialconditions, and embody the fairness of tax. Although to a certain extent, personalincome tax reform reduced the burden of the working class, there still have limitationsin organizing fiscal revenue and adjusting income distribution, affecting the taxburden fairness, therefore, personal income tax policy still needs further reform.This article researched the effect of China’s personal income tax and proposalsfor reform which based on the principle of equity in the public administration.Literature research, empirical analysis, comparative analysis and interdisciplinarystudy are used. First, the paper reviewed the research situation of the individualincome tax at home and abroad, explained the meaning of fairness principle in publicadministration and tax, as well as the related concepts and theoretical basis ofindividual income tax. Second, the thesis analyzed the current development status ofChina’s personal income tax, mainly reviewed the development of China’s personalincome tax, analyzed the purpose of implementation of China’s personal income taxand the content of personal income tax reform in2011as well as its changes andimpact, and determined the value orientation of the personal income tax. Third, thearticle analyzed the effect of China’s personal income tax in organizing revenue andregulating income distribution, studied the personal income tax’s total amount,reformation and tax burden on residents of different income levels and different kindsof income by using a large number of statistical data, and then summarized thereasons of China’s personal income tax shortage in fairness principle. Fourth, learnedfrom the experience of foreign personal income tax and targeted on the principle offairness missing from the personal income tax, the paper made suggestions about taxmodel, tax elements, collection management and the external environment.The original intention of the personal income tax is to adjust the income gap, especially more tax to high-income earners, less tax to low-income earners, togetherwith other means to achieve income fair. By analyzing the effect of China’s personalincome tax implementation, found its lack of fairness, and studied the reasons as wellas reform proposals which help to accurately position the current and future trends ofChina’s personal income tax and provide useful guidance. As a result, the research ofpersonal income tax has important practical significance in China. As one of China’stax policy, personal income tax adhering to fairness principle also has theoreticalmeaning in public administration.