The Study Of Individual Income Tax Rate Model

Since the implementation of Chinese individual income tax law for 30 years, individual income tax revenue has increased year by year. Individual income tax becomes an increasingly important tax. However, with economic development, the defects in practice are gradually exposed. The multi-rate model is not only inconsistent with the principle of tax efficiency and fairness, but also lead to low collection efficiency and high cost of taxation.The individual income tax rate model of foreign reform trends can be summarized as three models:one rate model of progressive tax, one rate model of proportional tax, and dual rate model. As one rate model of progressive tax requires a higher level of collection and management and one rate model of proportional tax is weakening in income distribution function, they are not suitable for Chinese conditions. This paper proposes dual rate model. Individual income is divided into two parts, capital income and labor income. Labor income is use of progressive tax rates. Capital income is use of the proportional tax rate. This paper, on the basis of drawing the dual rate mode of four Nordic countries and the problems of the current individual income tax rate, combined with Chinese specific conditions, designs the tax base, tax rates and other factors of the dual tax rate mode, proposed the dual tax rate mode which is adaptive and operational.