A Study Of Expense Deduction System Of Individual Income Tax In China

Individual income tax is a tax levied for individual taxable income,it imposes inclusive influence to almost everyone with its wide coverage. As a world tax category, individual income tax has two hundred years history since it was established,and it has become the main incoming source of national financial revenue in many countries.Individual income tax possesses dual function of organizing financial revenue and adjusting income distribution.Of all the elements in individual income tax, expense deduction system directly determines tax base and tax burden, thus is a key factor affecting the tax system fairness. Individual income tax was levied quite late in China, but it is developing with high speed.Since our country began to levy individual income tax in 1980 , it has played important roles in promoting the economic development of our country.In recent years, as China's economic development and national income increasing, many low-income taxpayers have joined the individual income tax group, and currently individual income tax has become the fifth largest tax of China. However, the gap between rich and poor is growing in Chinese society, there are many unfairness and inefficiency under current expense deduction system, which has greatly exacerbated the instability of the country. Besides, the sixth reform of individual income tax has been launched in 2011, and the twelfth Five-Year Plan also puts great emphasis on individual income tax reform, referred as "gradually establish a classified-collected individual tax system".In this policy context, this thesis aims to have a comprehensive study of expense deduction system of individual income tax. The main content of this thesis is divided into four parts. First, this thesis makes a deep theoretical analysis of tax deduction system from the perspective of public administration, including distribution justice theory, human rights theory and game theory, etc. The second part is the study on China's tax deduction system including its history, characteristics. The third part is the analysis of problems in the tax deduction system, from the perspective of expense deduction standard, expense deduction category, expense deduction method and individual tax model. The four part finally concludes this thesis based on the theoretical analysis and empirical research of the tax deduction system.