Research On Individual Income Tax In China From The Perspective Of Equity

Since current personal income tax system in China is the implementation ofclassification, currently only source of income from the dominant high-incomeearners (such as high wage earners) is relatively easy to control, making the currentpersonal income tax reduced to a payroll tax. Regarding the study of personal incometax, currently Chinas domestic scholars mostly focused on specific elements of thetax system; also some scholars believe that the existing classification should soon beconverted to the integrated income tax system or a combination of comprehensiveand classified, but the study of putting specific elements into new tax system andhow tax collection system can well support tax system conversion is still rare. In thispaper I examine Chinas current personal income tax from the perspective of a fairdistribution of income. The full text is divided into five chapters: Introduction to askquestions, conclusion to summarize outcomes of this study, in the middle of eachchapter describes the important issues respectively.The first chapter. Introduced the background, purpose and meaning, identified aclear object of study, described current research, outlining research methods. Chinaspersonal income tax system proposed reform is to have every element of a specifictax to be considered in the context of tax system conversion.The second chapter of tax equity theory. First study of human society on equityissues, combined with the reality of modern economic and social development onthis basis, gave the new definition to the fair in the modern sense, and also deeplyanalyzed the equity from a theoretical and practical level. Then, by combing Westerneconomists describe the principles on fair taxation, the principle of fair taxation wasdefined, and measure of tax fairness was noted as three objective criteria: income,property and consumer spending.Chapter three. Analysis of Chinese individual income tax fairness. First pointedclassification system is not conducive to adjust the equitable distribution of income;by way of example, and drawing table respectively to illustrate the inequality ofcurrent personal income tax system from both horizontal equity and vertical equity. Then, further pointed out that not effectively defining and monitoring all income oftaxpayers, is difficult to reflect the principle of universal taxation; also conduct thedemonstration from two aspects of identifying taxable income and the exemption ofincome. After that, the one size fits all type of expense deduction system is difficultto reflect the principle of affordability; to illustrate this respectively from the familyburden, inflation, and low expense deduction standard of some taxable income.Again, the rate structure design is unreasonable, resulting in the serious injusticeamong several taxable incomes. Finally, poor tax collection system aggravated theinequality of personal income tax. Main features: one, related collection systems maynot be implemented; Second, tax assistance of other departments is not good, theresponsibility is unknown; Third, the credit system is not perfect, cash transactionsare quite common; Fourth, the income tax evasion is not severely punished.Chapter four. Chinas personal income tax reform. First, the principle of taxfairness and personal income tax reform. Pointed out that the principle of tax fairnessis first priority of tax system design and implementation. Then, to clarify theobjectives and principles of Chinas personal income tax reform: the introduction ofcomprehensive and classified taxation model; implement differentiated individualdeduction system; wide tax base, low tax burden, moderately progressive rates;withheld at source with its own integrated reporting combined. Meanwhile, in orderto provide a practical design of a tax combination of comprehensive and classified.Finally, within a comprehensive and classified tax system, to define the specificelements of the tax system (including the taxpayer, the tax scope, deductions andstandard tax rate); especially all these items look more innovative, which includes thetax division in between comprehensive portion and classified portion, the additiondeduction of establishment, comparison in between the existing tax rate and analogtax rate.Chapter five. Comprehensive and classified taxation model supporting systemsand measures. Collection systems and related supporting measures including: afully implement the existing collection system; second, the establishment of a unifiednational personal income tax collection and management information platform; third, establish an effective monitoring system for property and income; fourth, theestablishment of cross-audit system of personal income tax.Conclusion, summarized the relevant outcomes of this study.