The Dual Income Tax (DIT): Theory, System And Effect

In the background of economic globalization, many countries have reformed their tax system in order to raise more revenue to meet the growing needs of the public expenditure and ensure that the goods and capital elements flow efficiently in the world at the same time. They hope to broaden the tax base and increase the income in efficient, fair and simple way, making the negative effects to a minimum. Since 1990s', some Nordic countries introduced dual income tax which advocates taxing different types of income to the two different types of standards. This tax system meets the requirement to provide a reference for the reform concepts and ideas.Based on the review and comment on the literature, this dissertation analyzes its theoretical base, introduce the implementation and experience in the four Nordic countries and other countries. Then there is a further analysis of the effect and last is the enlightenment of DIT to the reform of personal income tax in China.The full text is divided into five chapters to explore the related problems on three levels of theoretical research, effect analysis, and polices. The first chapter is part of the introduction to this dissertation. This chapter mainly introduces the topic, background and significance, the scope and framework of this research, and the methods, ideas, innovation and the significance of the research results. The second chapter is part of the literature review of this dissertation. This chapter concludes and analyses both the foreign and domestic literature and analyzes and evaluates these research scholars on that basis. Chapter three do a qualitative of the DIT firstly, that is, it belongs to the main three modes of personal income tax. Then it introduces the implementation and experience in the four Nordic countries and other countries. Chapter four analyses the effect from equity and efficiency aspects, based on the theory and practice concluding. Chapter five analyses the enlightenment of DIT to the reform of personal income tax in China with the specific circumstances of China's personal income tax.Under China's current economic development and the need to reform the personal income tax, this dissertation holds that the DIT is more suitable for China's current personal income tax reform, compared to the other two models. It can be embodied in the principle of taxpayers, while adhering to the different nature to practice the principle of differential treatment as well as stronger regulation of the resumption of the distribution efforts, but also to ensure that the people of our country at the same time the level of tax collection and management can be adapted to their needs. Therefore, China's current dual system can choose to reform the existing classification system, such as the conditions are ripe, and then gradually to consider comprehensive tax model transition.