| Though individual income tax (IIT) has a short history, at present it has become a very important worldwide taxation. Almost all countries have begun to tax individual income, and the percentage of IIT in the whole tax revenue has exceeded other taxation's in many countries.In our country, IIT has developed rapidly. Not only has the revenue of IIT been increasing greatly, but also its influence on economy has become more and more obvious. In order to keep the stability of society and development of economy and adapt to the change of economic environment, it is necessary that IIT should be further reformed and perfected and the economic effect of IIT deserves further study.This article is made up of three parts, and the main view and basic ideas are as follows:IIT appears late and develops fast. Why does it show such a state? This mainly links to its own functions. At present it has been accepted that market has the ability to promote the growth of economy remarkably. Therefore, every country endeavors to take advantage of the function of market mechanism. In the meantime, it is noticed that market results in instability of economy and unfairness of distribution. IIT, as a powerful tool of adjusting economy and achieving the public revenue, just meets this kind of need. It is because of its economic and social attribute that IIT develops so rapidly and becomes a well-known taxation in such a short time.In the first part of this article, it presents the basic principles of IIT, including the concept of income. From here we can see that it is very complicated to define income in theory. In practice the taxable income is set by national law. Why should government tax individual income? One of the main reasons is that the government has to provide individual with public good, so people have the duty to pay tax. In market economy, the income gap of people is becoming wider and wider, which results in the instability of society. However, IIT has ability to adjust individual income level. In addition, with the development of economy, individual income is increasing, which makes it possible to tax individual income. In this part I also research into the principles of establishing IIT, that is, principles of fairness, finance, simplicity and efficiency. Finally, IIT has its own feature of fairness, flexibility and so on.The second part mainly focus on IIT 's economic effect. As is known to us, market economy has its cycle which alternates between recession and prosperity. To iron out economic fluctuation, every country put emphasis on fiscal and monetary policy. IIT, as an important part of fiscal policy has the function of auto-stabilizer. Progressive IIT has the inner power to iron out the fluctuation of economy. During prosperity of economy, income expand with the gross expenditure enlargement, the IIT system turns the surplus of the public income into the tax of government automatically. On the contrary, during recessing of economy, income decreases with the gross expenditure, and the government tax falls accordingly. In a word, progressive IIT affects change of social demand. Thus, it can iron out the fluctuation of economy to some extend. At the same time, we need point out that the stabilizer function of IIT is a two-edged.The fluctuation of economy is bound to result in the fluctuation of unemployment rate and price. It is of practical significance to study the effect of IIT, especially in our country, nowadays, increasing of unemployment rate and coming of deflation. Human is the most active factor of production force. When all the people work hard, the country is bound to prosper. Then, how does the IIT affect labor force? Although determining whether people work hard or not has lots of factors, income is one of the most important. Thus, the reason why IIT affects work initiative of people is that it decreases people's income. On condition that work time can be chosen, IIT can influence work initiative of the individual labor. Whether the influence is positive or negative is determined... |
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