The Study Of Regulations On Enterprise Executive Compensation Income Tax

Abstract:The essence of the problem of the executive compensation income is the same as the problem of company management. While the company autonomy fails and must lead into the regulation of external mechanism, the tax legislate as the national macro-control means is the most common method to regulate the executive compensation. The Chinese government has introduced a lot of tax measures of limiting high-income groups, in order to reduce the income gap and realize the fair distribution. For the diversity and concealment of executive compensation, the current law of income tax has many shortcomings. Firstly, the individual income tax law is lack of control on executive compensation. Secondly, enterprise income tax law is lack of regulations on wage deductions and the standard for the reasonable salary expenditure. Thirdly, the effect of the long-term incentive is fail for being lack of tax system of incentive stock option.At first, this paper starts from analyzing the necessity of regulations of enterprise executive compensation income tax to point out its value which is to achieve fair tax, justice distribution and effective regulation. Then to analyze the feasibility according to the mechanism of tax legislative regulation in U.S.. Finally, to suggest the measures to solve the main problems of executive compensation income existing in the enterprise income tax law and the individual income tax law. That means to levy income tax of executive income. It is need to stipulate the taxable items of executive welfare income and the tax time and the favorable range of stock option income in order to reduce the possibility of tax evasion by executives. Meanwhile, to prompt that the executive income depends on outstanding achievement through different policies of tax preference which are to induce the company to implement incentive-based stock option plan.