Personal Income Tax Reform Study

The personal income tax occupies a very important position in the modern tax system. After more than 200 years development, personal income tax has become a main tax category in most developed countries and a significant resource of finance income in many developing countries, and plays an important role in the income reallocation and macroeconomics regulation. with the moving forward of china's reform and opening up and the establishment of market economy system, and the growth of people's income and the widening income gap, our contemporary personal income system cannot satisfy the demand of social and economy development for China's personal income tax imposition starts late and through a short period of time relatively, thus it is in an urgent need for reform and improvement.The present paper is composed of four chapters, each chapter of main contents as follows:The first chapter starts from the analysis of personal income tax's development process in china and western countries, concluding the development law of the personal income tax, and judging it combining with the politic, economy, social, and culture background in the personal income tax development process.The second chapter based on the historic analysis of the personal income tax system, this paper distills the special influencing factors to the personal income tax, including the development level of production capacity, economic system, tax system construction, tax ambition, history and culture tradition, and the integrity degree of the law.The third chapter positions our country's personal income tax function through the personal's micro level and economy's macro level, then pointing out that the function position of our personal income tax shall focus on both the income function and the adjustment function. Combined with the four tax system design principles recognized by the academics, including the efficiency, fairness, simplicity, and low-cost principle, this paper puts forward the basic principles that shall be observed in our personal income tax construction. These are the equal focus on the fairness and the efficiency, widening the tax basis and decreasing the tax rate, and simple to conduct and cost reduction. The fourth chapter according to the tax system construction basic principles mentioned above and our national condition, this paper comes up with the reform and improvement of the specific factors which constitute our national personal income tax system. That contains the selection of tax imposition mode, affirmation criteria of taxpayer, the adjustment scope of the tax imposition, the adjustment of the tax rate structure, the selection of the tax application body, the adjustment of the expenses deduction standard, and the reform of the tax refund and preference.