Analysis Between China's Personal Income Tax And Economy Growth

Our country has undergone earth-shaking changes in the past more than 30 years of Reform and Opening up. Our national strength and material and cultural level have been growing unceasingly. At the same time, we should also see clearly that there is still great gap between China and the western countries in GNP and GDP per capita aspect. Our people's Living standards and quality still needs further enhancing. We still face a series of social problems (such as unemployment, social security, environmental pollution and so on). The only way to catch up and ultimately excel western developed country gradually, increase people's income rapidly, improve people's living standard and solve the social problems is making rapid economic growth. Premier Wen Jiabao once said:"In a country with a population of 1.3 billion, if there isn't certain economic growth and full employment, improving people's well-being is empty word. As a kind of excellent taxes which is recognized world-widely. the place of individual income tax reflects the advance degree of a tax system. As an important category of tax, not only can it adjust the gap between income and distribution, but more it can adjust social economic development speed, so, it was called the "automatic stabiliser" to adjust economy.As the national income tilt to individual gradually, state tax will depend on the individual income tax more. The function of promoting economic growth of the personal income tax will be greater and greater. The individual income tax of Our country was collected from 1980, experienced 30 years, which has contacted with people most closely, also become the focus of the social concern, key point and hotspot.It has both theoretical and realistic significance for economic growth and coordinated development of individual income tax to further analyze the relationship between individual income tax and economic growth in China. On the basis of summarizing and referencing of great literature, this paper carried on a more detailed analysis of the relationship between individual income tax and economic growth from both theory and empirical aspects.This paper is divided into five parts. The first two parts elaborate the causes and significance of the subject selection, and have a review of the previous research achievements. The third part is part of theoretical analysis, which has a comprehensive analysis for theory of the mutual influence and the concrete influence factors of individual income tax and economic growth. The fourth part is an empirical analysis, this article selects the related economic data from 1994 to 2009 and calculates series of indexes which are used to measure the relationship between them and thus obtains more comprehensive and objective understanding. The fifth part analyzed summarized the experience of the personal income tax reform and economic growth promotion in some countries. The sixth part is about the study conclusion and policy suggestions. It evaluated the relationship between individual income tax and economic growth in our country and puts forward the corresponding countermeasures and proposals.There are two mainly innovative points in this article:one is that this paper has a comprehensive analysis from three aspects of the influence of economic growth on individual income tax, effects of individual income tax on the economic growth and the coordinated development of them, and then obtains two conditions which can make them develop coordinately, and points out three problems which need properly handle. Another is that according to the theoretical and empirical analysis, this paper thinks that the core of the coordinated development of individual income tax and economic growth is tax fund and puts forward the concept of the taxable GDP of individual income tax, and proposes the economic reform direction on the focus of how to increase the taxable GDP.