Research On The Legal Regulation Of The Loss Of Personal Income Tax For High-income Earners

In terms of the existing Individual Income Tax Law in China,working class is the major object of taxation in our country,while the loss of individual income tax in the high-income group is comparatively severe."The Matthew effect" will be exacerbated if no regulation is imposed on it.The increasingly large gap between the poor and the rich will severely influence social equity,as well as the justice of law.Therefore,study of individual income tax loss in the high-income group is practically significant.Starting from the individual income tax evasion of a person with high income,dissertation analyzes the current situation and causes of individual income tax loss of the high-income group,It is discovered that,people with high incomes usually evade their individual income taxes by claiming personal consumption as enterprise expense,replacing salary with welfare,dispersing income of employees in the company,evading self-declaration and reasonable tax evasion of"RMB 1 Yuan salary’,etc.in reality.Through the study of Article 2,6 and 8 of Individual Income Tax Law,Article 4 and 111 of Tax Collection and Administration Law,and Article 201 of Criminal Law,it is indicated that aforesaid methods attain the goal of tax evasion by virtue of defects in the law system,which are mainly embodied in three aspects:unreasonable tax system,unscientific tax collection and unsound punishment and incentive mechanism.Unreasonable tax system includes defective mode choice of individual income tax system and irrational expense deduction design;unscientific tax collection is related to unspecific tax assessment,imperfect self-reporting system of individual income tax,unscientific system of tax collection information and unsound laws relating to tax agencies.Therefore,it is necessary for China to figure out a legal strategy to prevent individual income tax loss in the high-income group by drawing lessons from foreign experience and combining them with the situation in China.Primarily,it is necessary to implement mixed income taxation system,declaring and paying the tax of successive or regular income comprehensively and collecting tax of one-off income by categorization.A rational expense deduction should be designed,in which a ceiling should be imposed on expense deduction regardless of the tax category and the expense should be deducted monthly or annually instead of being deducted every time the tax is paid.Secondly,tax assessment should be divided into two parts,suggested assessment process and normal assessment process,and it should be included into Tax Collection and Administration Law.It is necessary for taxpayers and withholding agents to declare the tax jointly,and it is also necessary to perfect the declaration system by establishing a two-way cross audit system between individual declaration and unit declaration,to enlarge the main bodies who are required to implement the unified identification numbers from national and local tax bureaus to each administrative department like industrial and commercial bureau,and relevant institutes like banks.Lastly,it is suggested to remove the percentage limit of evaded tax in tax payable,make records of tax evasion into the credit system,establish a "green" declaration system and offer a certain discount based on declaration credit.This series of measures can prevent individual income tax loss in the high-income group,shorten the gap between the poor and the rich,promote equity in individual income tax,and eventually offer financial support and power for the economic development and social advancement in China.