On The Feasibility Of China's Socialist Market Economy Under The Income Tax Taxes Tax Model

The advantage of the market economic system lies in that it can optimize the resources distribution and can guide people?s economic behavior according to the supply and demand conditions of the market. However, the scattered benefit main bodies pursue to the maximized interest will do harm to the economic effi- ciency in some degree and increase the gap between the rich and the poor, al- though this kind of pursue will construct the economic motive power. While those efficiency defects and distribution defects couldnt just be compensated for by the market economy itself. To overcome those defects needs the involvement of and interference from the government, where the most important economic lever mastered by the government is just the taxation. Generally speaking, the adjustment function of tax to the economy exhibits two operating mechanism, the so called nner stabilizor and the olicy of deci- sion as one sees fit and the exertion of the two mechanism is to be realized mainly through the accumulative income tax system, which is the most impor- tant means among the tax system to operate the macro adjustment completely on the market, consequently, the mode of tax system in which income tax is the main exerts the incomparable function in strengthening the stability of macro e- conomy and in carrying out the fair tax principle, it is naturally compatible with the socialistic market economy. Therefor,with the improvement of the productive ability and the accrument of the national income, and with the lessons drawn from the general principles and successful experiences from the international tax reform and development, it is reasonable and feasible to establish the tax system mode with the income tax as the main part, no matter what kind of tax system mode our state adopts currently. Of course, the switch from the old to the new tax system mode is not a sudden but a asymptotic process. We have to consider the tax system mode a dynam- ic natation, and should view it on the socialistic primary stage, dividing it into three phases: the short term mode, the middle term mode, and the long term mode, furermore, we have to take the realization of the tax system mode with the income tax as the main as an long term objective, preparing and creating con- ditions for it constructively.