Theory Of Tax Reform In General And The Corporate Income Tax Reform Outlook

After the fulfillment of the tax reform in 1994, mainly covering the restructuring of Value Added Tax, the reform on enterprise income tax system, as one of our double principal tax systems is going on. Directed by the theory of socialist market economy and modern enterprise system, the writer tries his best to explore some important problems concerning China's enterprise income tax system under the title of "General Theories on the Reform of Tax System and a Prospect of the Reform of China's Enterprise Income Tax System". This dissertation is composed of an introduction and three chapters, totaling over 35 thousand words. The main points are as follows:Income tax practice in China started 100 years later than that in western countries. So in the first chapter the writer introduces and analyse two western basic theories on tax system reform: the school of Supply-sider and the school of Welfare-sider. Supply-siders argue that tax slash can prompt economic growth. But their theory is based on a well-developed market economic condition, thus not conductive to developing countries' tax system reform. Welfare-siders think optimal taxes are within sight but beyond reach. Second Best Taxes takes both fairness and efficiency into consideration. On corporation tax law's reform, also the concern of this paper's subject, they insist on "low tax rate and wide tax base". Those in favor of efficiency tend to choose a decreasingly progressive tax rate in excess of specific amount, and those in favor of fairness tend to choose a increasingly progressive tax rate excess of specific amount. The main disadvantages of China's existing proportional rate of tax are low flexibility and unfairness of tax revenue. The writer suggests that a decreasingly progressive tax rate be taken in our new enterprise income tax system so that the principles of fairness and efficiency can be both put into a full play.The second chapter, having briefly reviewed the history of china's enterprise income tax practice, clears up some misunderstanding in theories related to the relations between tax allotment, profit distribution and state ownership. It is in 1988 that our country's enterprise income tax practice began. The writer believes taxation allotment is different from general allotment of economic attribution, because taxation allotment is based on law and takes nation as the subject of allotment. Marx's theory on "the separation of two rights" refers to "the separation of money capital and industrial capital", instead of "that of ownership and managerial authority", which we often mention. The former is a form of operation while the later is a kind of enterprise system's arrangement based on the theory of modern enterprise system. It is managers who decide whether enterprise's profit is distributed or not and how it is distributed. So only by market behavior does an owner make his property quality guaranteed or value increased. The third chapter gives some policy proposals on the reform of China's enterprise income tax system. Its discussion and analysis are focused on the essential factors of the tax system. 1. Taxpayer. We have been using "independent accounting unit" to decide a taxpayer instead of " legal person" defined in corporation law. Generally, income taxes consist of corporation income tax and personal income tax. In western countries, only those corporations established in accordance with agreement of the corporation law have the liability to pay corporation income tax, and those enterprises, such as individual ownership enterprises and partnership enterprises, not qualified as "legal persons"(corporation), may not pay income tax in the name of corporation. With the further reform of socialist market economy in China, the existing enterprises will be transformed into modern enterprises, therefore the principal part of the market should be regulated as individual ownership enterprise, partnership enterprise and corporation enterprise. 2. Total Assessable Income. The writer puts emphasis on taxable wages under the ne...