Tax Policy To Promote Investment In Human Capital

The promotion of Human Capital Investment (HCI) has become the important foundation for economic growth and social development, the government should shoulder the inescapable responsibilities for the settlement of shortage of HCI, whereas the taxation is one of the most important instruments for government to implement the macro economic adjustment, it can play the essential role in promoting HCI. This paper starts from the theory of the relationship of taxation and HCI, analyzes the existing problems on the tax policy regarding the HCI, and puts forward some suggestions for the tax policy on the promotion of HCI.The whole paper is divided into four sections.Section one introduces the purpose, significance, orientation and achievements of research on the tax policy of HCI. This section gives the emphasis on the theory of Schultz T.W., Buskin M.J. and Rosen H.S., giving the detailed analysis on their theory of relationship between taxation and HCI. It also introduces the valuable discussion on tax policy, which promotes HCI in China.Section two gives the theoretical analysis on the tax policy of HCI. Fist of all, it defines Human Capital and Investment in Human Capital, analyzing the main characters of HCI. Then, through using theories of taxation and HCI, it gives the detailed analysis on the importance affection of tax policy in promoting HCI decision-making of governments, companies, persons and so on.Section three gives positive analysis on current HCI situation and tax polices in China. This section includes the contents of following three parts: the fist part gives the detailed descriptions on the current situation of HCI, separately analyzing gross, structure and yield; the second part introduces the current tax polices of HCI; the third part analyzes the problem of current tax polices of HCI.Section four gives the discussion on how to promote HCI from the point of view of taxation regulation. Firstly, this section gives the comparison study on foreign HCI tax policies. Then, it puts forward the advices of taxation regulation, which promotes HCI decision-making. This section also considers it necessary to strengthen tax levy, which lead to a nice taxation environment for HCI.Using the research achievements of other people for reference, this paper systematically analyzes the tax policy of HCI, and strives for the breakthroughs on analysis methods and the countermeasures. These breakthroughs are mainly expressed in the followings:This paper insists on taking macroeconomics and microeconomics principles. As for study methods, this paper pays attention to the combination of normative analysis with positive analysis, and lays stress on the positive analysis. This paper also adopts benefit-cost analysis, giving the detailed analysis on the importance affection of tax policy in promoting HCI decision-making of different investors. In addition, this paper extensively uses the comparative analysis methods, including horizontal analysis and longitudinal analysis. Through comparative study, especially the comparative study on foreign HCI tax policy, this paper seeks the practices, which are of benefit for our country to use for reference.This paper thinks that HCI has many investors; therefore we cannot just simply depend on directly financial payout, we should adjust tax polices to promote HCI which done by companies, persons or others. As for specific countermeasures, this paper also puts forward some new viewpoints. For example, it advises to substitute Education Tax for Education Add-fee, basing on income and earnings. It also advises to consummate the expenses deduction of Individual Income Tax, carrying out integrated family expenses deduction and elasticity reformation. In order to encourage social capital investing in education, it considers partly returning income tax is a good idea, i.e.