China's Personal Income Tax System Reform Model Designed

Personal income tax is an important method of sourcing government revenue, equalizing social wealth and regulating economic circulation.Accompanied with the increase of social economy and personal income tax,it is obvious that our personal income tax system has fallen behind.It's inevitable of both the problems of fairness on personal income distribution and adjustment of personal income tax.It becomes extremely urgent that we should focus more on the function of modulating the gap between individuals and economic circulation.Since the comprehensive income tax system is difficult to carry out in China, the dual income tax from the north European countries becomes an ideal one. Considering China's status,we can use their experience for reference and design a similar one which combines both scheduled tax and comprehensive income tax.So far,the domestic study on income personal tax,especially the theory basis and systematic study of dual income tax are rare.The dual income tax alleviated the excessive taxation due to progressive tax rate.But how to avoid the transformation between labor income and capital income,and how the system effect the entrepreneur.The paper introduces some of the advanced countries' taxation models of an entrepreneur and taxation of enterprises,to explore the positive effect upon behaviors of entrepreneur and shareholder under such a income tax system.Chapter 1 summarized the theory and papers of personal income tax.Chapter 2,on the basis of theoretical analysis,elaborated the dual income tax.Chapter 3,combining with specific practice,approaches and experience from advanced countries,analyzed their experience.Chapter 4,after analyzing the current Chinese personal income tax system and its existing problem, comparing the capital income tax rate and labor income tax rate levied among neighborhood countries with Chinese local tax policy,it is argued that how to execute a taxation which is a combination of both the classified income tax and the consolidated income tax in China,in order to create a fair and efficient system environment to personal income tax accordingly.