On Perfection Of The Individual Income Tax Law System In China

Individual income tax law system is the sum total of the rules and regulations applied in the process of regulating individual income tax system and executing individual income tax collection and management, it has important meanings for improving the fairness of income distribution, protecting social fairness and justice, and establishing harmonious society. Penetrating principle of the fairness of tax in the individual income tax is consistently an important content of individual income tax law system. The current individual income tax plays an very important role in organizing national financial income and regulating income distribution, but individual income tax started quite late, the legislation is imperfect, shortages of the fairness of taxes express in individual income tax are as the following four aspects:Classification tax system is not reasonable, marginal tax rate is too high and low-grade tax is too narrow, the expense deduction standard lack of pertinence and collection and management systems are imperfect. These four aspects lead directly to the insufficient strength that income tax regulating distribution distance, and legislation aim of tax neutrality cannot be achieved and it also goes against the construction of a harmonious society. Chairman Wen Jiabao said at the two sessions which closed in March this year."The first great thing of the government is to formulate an overall plan of reformation of income distribution." As a direct tax which adjusts income distributions distance, individual income tax should consummate constantly and advancing with times for the guidance of principle of the fairness of tax.Research methods of horizontal comparison, longitudinal comparison and tabular method are applied in this paper. There are five parts to discuss the problem of the improvement of the individual income tax law system in China.The first part is the introduction to expounding the source, aim, significance and innovations of this paper, the objective shortage of individual regulating income distribution distance is pointed out in the paper source. Feasibility and necessity of the improvement of the individual income tax law system is discussed theoretically and practically. The innovation of this paper is embodied in:the expense deduct standard and CPI combined as linkage mechanism in the optimizing design of the expense deduct standard, Constructions of income tax administrative hearing system and individual income tax rebate system in the improvement of collection and management systems.The second part introduces general theory of principle tax equity through the introduction of the evolution of the process of fairness thought development in China and the western country, to clarify its importance in the design of the individual income tax law system which provides historical documents support for the following text. Meanwhile, analysis of the definition of tax fairness and two standards to judge:Firstly, whether the fundamental rights of all social members are protected; Secondly, whether the tax is distributed reasonably among the taxpayers, it emphasizes the inseparable relationships between principle of tax equity and individual income tax.The third part further defines the problems in individual income tax law system existing at the present stage through the history evolution of individual income tax and comparison for amendments of previous laws of individual tax, the problems mainly reflected in the following four aspects:scheduler system of taxation model, tax rate and bracket, expense deduction system and collection system.The forth part will discourse on a comparative analysis of the successful experience of individual income tax law system in major western developed countries; it gives an introduction to the successful experience of individual income tax in major western developed countries. Through comparison and analyzing on four aspects of individual income tax system, tax brackets, expense deduction system and collection and management system, it concludes the references we get from the improvement of individual income at present. And it has profound significance on the consummations of individual income tax law system in our country.The fifth part is an optimizing design of the consummation of individual income tax law system in our country, and it is the focus of this paper. It points out that the consummation of individual income tax should based on practical situations of our country, classification tax system should develop toward the comprehensive tax system and classification combined, reducing high marginal tax, expanding covering square of low-grade tax rate. Changing the unified the expense deduction standard into tax home as a unit, combining pay roll expense deduction standard with CPI, no distinguish on domestic and foreign pay roll expense deduction standard; improve all links of the law system constructions in legislation, execution and law-abiding of collection and management of the individual income tax.