On The Institution Of Law Of Personal Income Tax And Its Completion In Our Country

Since The Law on Personal Income Tax set out in 1980, it has taken shape into a relatively complete serial of system on tax institution and collection through gradual exploration and summary of 20 years. The Law on Personal Income Tax has played a significant role on distribution of personal income and arrangement of state revenue since the implement of it. Personal income tax, which is the fastest-increasing and biggest-potential tax, has become the public concern with the vast number of taxpayers and widest range of scope. Collection of personal income tax is beneficial to adjust the distribution of personal income, to achieve social equity, increase state revenue, to develop the function of tax as the automatic stabilizer of economics, and to optimize the distribution social resources. Presently, there is curial problem on division of person tax income-further gap between rural and urban areas, different regions, various industries, and personal income. According to the internationally accepted Gini Coefficient which reflects the current situation of division of income, individual income gap in our country has surpassed the internationally accepted alarm level with growth year by year, giving birth to many social problems. Thus, reducing this gap to realize common prosperity has become the key assignment of economical development in our country. Personal income tax is a direct tax on individual's gains and profits. It has numerous regulating measures such as progressive tax rate in excess of specific amount, zero bracket amounts, deduction of live hood amount, which enormously increase the efficiency of division of personal income tax, rendering it the most functional fair income division tax in the field of reallocation. Collecting personal income tax is beneficial not only to diminish the formed income gap, but also to achieve social equity and to alleviate social contradiction.With the implement of reform and opening up going deeper, and the foundation and development of the socialist market economy, the state economy and national income level has taken earth-shaking changes. But the institution of law of personal income tax remained unchanged during the last ten year, which can not match the real material living level, causing the narrow scope of personal income tax collection and extensive and simplified expense deduction. With irrational design structure of tax rate and complex system which is too difficult to levy, personal income tax is referred as most difficult levy, which has the universal and severe phenomenon of tax evasion, generating many unfair tax bearings. With a view to the entrance of WTO and continuous increasing of national economy, personal income tax institution obviously not adjust to the though of fair taxation and its function to regulate the personal income is not fulfilled as well. Aiming to form the rational system of income distribution, the reform and completion of personal income tax is required objectively. Therefore, discussion on the completion of institution of law of personal income tax with a viewpoint of tax law and tax practice undoubtedly has significant and desperate meaning in practice.This thesis discussed the verified major aspects of completion of institution of law of personal income tax from a overall point. Because of the limited knowledge of the author and the length of the thesis, I can't focus on are respects, and some of the contents are not deeply discussed. With about 25,000 words, the thesis arranges the structure as listed below:I. The theoretical principle of institution of law. The theoretical principle of institution of law of personal income tax is specifically divided into three sectors of theoretical base of tax, valuable objective location, and the principle of fairness and efficiency. It illustrates the main theory on tax of western economists, which includes public necessity theory, exchange theory, obligation theory and economic regulation theory. With the viewpoint in economic regulation theory to regulate personal income as its core, and standpoint in public necessity theory and exchange theory as necessary, the thesis analyzes the function of personal income tax in perspectives, arriving at a conclusion that it's necessary and reasonable to tax. Besides, considering the objective location of completion of institution of law of personal income tax and the tropism of principle of fairness and efficiency, the author holds that in current stage to reform and complete institution of law of personal income tax should choose adjustment of division of personal income as key value and propose, and pay attention to the principle of fair tax bearing and analyze its reasons.II. The foundation and development of current institution of law of personal income tax. Although the world institution of law of personal income tax has set up about 200 year's age, it only has over 20 years in our country. With a view of its generation and development, it has four stages: generation and establishment stage, enriching and regulating stage, standardizing and integrating stage, and reforming and completing stage.III. The main problem existed in current institution of law of personal income tax. The author believes there are four major problems. First, tax pattern adopt the scheduler tax system .which can not comprehensively investigate the affordability of taxpayers in one taxation year or a longer period and hard to reflect the principle of fairness. Second, the standard of expense deduction is not reasonable. Third, the complex design of tax rate in not fair. Forth, the tax levy system is distempered with methods fall behind. Just because the existence of these problems, some unfair tax bearing phenomenon are generated, making personal income tax fail to fulfill its functions of regulating personal income division. Thus, completing current institution of law of personal income tax is in desperate necessity.IV. Suggestions and thinking about the completion of institution of law of personal income tax. Learning experiences of reform on institution of law of personal income tax from western developed countries, I think the reform and completion of it is a gradual procedure, which can not be done in a moment. According to the requirement of developing socialist market economy, we should consider fundamental realities of our country,, implement classification combined with the composite system, improve law of expense deduction, complete levy measures of personal income tax, regulate the structure of tax rate, and finally complete the current institution of law of personal income tax in our country. As we undertake apt and specific measures to solve problems, we hope they will work effectively.Completing institution of law of personal income tax is not only a task demanding professional and technological skills, but also a work crucial to administration, locals and especially vital interests of taxpayers. Only with full discussion of all circles and nationals, scientific, democratic, orderly and feasible institution of law of personal income tax can be work out ,suiting for the development of our market economy.