Research On The Reform Of China’s Personal Income Tax System

Since China applied the implementation of reform and opening up, she has achieved brilliant achievements and the living standard of her people has also been improved greatly. However, just like other developing countries, she also faces many questions, the gap between rich and poor which will be discussed in this article is precisely one of them. The gap between rich and poor in China already existed for a long time, because of the previous system, it did not get the people’s attention. But in the thirty years after the market economy today, this problem has become a huge failure of China’s modernization construction. The problem of the gap between rich and poor gets the attention of many countries, because it relates to the success or failure of the modernization of the country. In China, The gap between the rich and the poor is an ancient and urgent topic. In fact, in the initial20years of the founding of China, this problem has existed. But because of the impact of the social system and ideology, People could not get a rational understanding about it. But today, after30years when we have got a deeper understanding of the market economy, the gap between the rich and the poor becomes a serious social problem of China. It became a stumbling block of China to success. Up to now, China has become one of the countries which have the highest Gini coefficient in the world, the disparity between the rich and poor gap caused dissatisfaction of the National and became one of the social instability. The reform program of Income distribution is failed to launch again and again, some interest groups obstruct such reforms. From this we can see the reform in the area of income distribution is very complex system problem. It requires the huge determination of government and the support of the people. About how to narrow the income gap, scholars have given many of the policies, like breaking the monopoly, establishing the social security system, promoting tax reform and so on. Among the above recommendations, the reform of the tax system got particular attention, this is because personal income tax plays a significant role in the regulation of income levels. So in the voice of income distribution system, people have high hopes to it. The irrationality of the personal income tax system mainly includes the narrow of the tariff lines, the irrationality of expense deduction, the complexity of tax bracket times. That leads to the failure of Personal income tax on how to narrow the gap between rich and poor. This paper is tightly around the core topic of the personal income tax reform. By summing up of the opinions of Chinese scholars and foreign experiences, this paper presents the views of the reform of the personal income tax system. I hope that the recommendations of this article can play a positive role in China’s tax system reform.