Research On The Optimization Of The Special Additional Deduction System Of Individual Income Tax From The Perspective Of The Ability-to-pay Principle Of Taxation

Recent years have witnessed the continuous and healthy development of China’s economy,which has significantly improved people’s wellbeing and has effectively guaranteed people’s livelihood.As the tax that is in closest relationship with people’s livelihood,individual income tax has become the key content in the reform of finance and tax system in the comprehensively deepening reform.Since August 2018,the reform of the new Individual Income Tax Law has received great attention from the society,for the reform has achieved a historic transformation from the classified income tax system to the comprehensive and classified combined tax system.In this reform,the special additional deductions have been set up for the first time,which include children’s education,continuing education,loan interest on the first house,housing rent,medical treatment of serious diseases and support for the elderly,and a new deduction item for expenditures on infant and child care under 3 years old was added in2022,which contributes to burden reduction of taxpayers and reflects the ability-to-pay principle of taxation in more aspects.In this research,a large number of relevant journals,monographs,papers and other documents concerning the ability-to-pay principle of taxation and the expense deduction systems were sorted out at first to go through on the development process of China’s current individual income tax and its expense deduction system,the embodiment of the ability-to-pay principle of taxation in the special additional deduction system of individual income tax,and the constraints on its system design.Through the analysis on the relationship between the ability-to-pay principle of taxation and tax payers,such as the impact of the selection of taxable units and the family taxation mode on marriage neutrality,and the balance between them;the analysis and explanation on the relationship between the ability-to-pay principle of taxation and the object of taxation,namely the specific content setting of 7 deduction items;the comparative analysis on the relationship between the ability-to-pay principle of taxation and the current relevant tax collection and management,namely the requirements for the tax collection and management and its current situation,this research tries to figure out the possibility to achieve the ability-to-pay principle of taxation and clarify the research ideas,so as to comprehensively and scientifically make a summary on the current situation of the implementation of the special additional deduction system of individual income tax under the ability-to-pay principle of taxation in China.Then,the situation and effect of the ability-to-pay principle of taxation in guiding the design and implementation of the special additional deduction system of personal income tax in the United States,Britain,Japan and other countries were compared to make an analysis and judgment on the main gaps and problems between the special additional deduction system in China and the requirements of this principle,namely the failure to give full play to the ability-to-pay principle of taxation caused by the insufficient reflection of the “family nature” of the special additional deduction subject,the violation of requirements for the net income taxation caused by the small coverage of the deduction,the non-compliance with the requirements for the ability-to-pay principle of taxation caused by the rigid deduction standards,and the objective damage to the ability-to-pay principle of taxation caused by the slow establishment of the supporting mechanism.Through the analysis,the main reasons for these problems can be summarized as the insufficient tax collection and management,the consideration on the unlimited scope of deduction,the practical consideration based on financial security and the lack of tax related data security mechanism.At last,four countermeasures to different problems and their causes were proposed in this research to optimize the design on the special additional deduction system in China on the basis of the ability-to-pay principle of taxation,namely adding more choices for tax payers to fully take account of the family factors;standardizing the scope of deductions and adding special deductions;establishing a dynamic adjustment mechanism of the deduction standard to achieve vertical and horizontal fair taxation;accelerating the construction of supporting systems and mechanisms to improve the tax collection and management.This research on the optimization of the special additional deduction system based on the ability-to-pay principle of taxation is of great significance for promoting the reform of individual income tax,optimizing the design and implementation of the special additional deduction system,giving full play to the rights of individual income tax and its deduction system in protecting people’s rights such as the right to subsistence,property right and right to education to achieve fair taxation.At the same time,it contributes to encouraging taxpayers to declare and pay taxes in good faith according to law,so as to improve their tax compliance.