Improve Our Charitable Giving Tax Incentives System Discussed

Charity is a sign of the civilization of a society. It is also a basic element of the Harmonious society. As a part of the Social Security Systems, charity is seen as the"Third Allocation of the Revenue", which the first is the market-allocation and the second is the government-allocation. But we are still in the Primary Stage of China's Socialism, the regime is not perfect enough to ensure the efficient of the Revenue Allocation System. The Gini Coefficient, measure of the equity of the Revenue Allocation System, is growing bigger and bigger in recent years. So the government now is paying more and more attentions to the charity allocation.There are tow opposite sides of charity, the donator and the receiver. So the tax credit can also be divided into the tow sides, tax credit for the donators the tax credit for the receivers. This dissertation will mainly focus on the tax credit for the donators , give some advises on the reformation of the tax credit articles in the Income Tax system, and also some advises on the operation of these articles.Unlike the previous research which admired that tax can stimulate donation, in this paper, we not only prove that tax can do stimulate donation, but also prove that the stimulation is Treasury Efficient. We introduce tow previous researches in our paper to prove that problem.The first is Vincent C.H. Chua and Chung Ming Wong(1999), the tow Singapore researchers, they analyzed the tax incentives of the personal donation by the Tax Price Elasticity. Because of the highly precise data and the perfect designed formula in their paper, and most importantly, the similar economic and cultural circumstances of the tow country, the result in that paper would be very helpful for the research in my own paper. In Vincent C.H. Chua and Chung Ming Wong's paper, the Tax Price Elasticity is -1 to -6, which means a single unit tax credit would bring more donation, in other words, the tax credit was Treasury Efficient.The second is Jon and William(2003), the tow American researchers, they analyzed the problem by the Estate Tax. Using three examples, they proved that the incentive on the donation of Estate Tax was also Treasury Efficient. These tow papers were mainly focus on the personal donation. We also calculated the Tax Price Elasticity of the enterprise donation was -2, which can be called Treasury Efficient. By comparing the present tax credit articles with some developed countries`, found the shortcomings of the present tax system, and then gave some advises on these problems.