Improvement Of China’s Individual Income Tax Legal System

At present, the problems of widening gap between the rich and the poor, and the unfairdistribution of income have been a threat to China’s long-term stability, how to play the roleof taxation in adjusting income distribution has become a conundrum which needs to besolved urgently. As one of the major taxes in China’s tax revenue, individual income taxplays an important role in adjusting income distribution gap, whose function of adjustingincome distribution is related to the fairness degree of China’s income distribution. However,due to the imperfections of China’s individual income tax legal system, as well as history,cognition, organization, system, society and the other reasons, the function of adjustingincome distribution of China’s individual income tax is increasingly weakening, which doesnot help solve the problem of unfair income distribution, but causes a further expansion of thegap between the rich and the poor. In view of what mentioned above, this article adopts thehistorical, comparative and empirical analysis methods to seek the concrete measures toimprove China’s individual income tax legal system in order to strengthen the individualincome tax’s adjustment function through the investigation of China’s individual income taxlegal system and the reference of foreign advanced systems from the perspective of individualincome tax’s adjustment function.Apart from Introduction and Summary, this article is divided into four parts:The first part is the functional orientation of individual income tax. First, it brieflyintroduces the historical development of China’s individual income tax during three periodsof1949-1979,1980-1993,1994-now, and the exertion of its two essential functions in eachperiod. Second, it uses historical and empirical analysis methods to explain the reasons whythe current China’s individual income tax should give priority to play the function ofadjusting income distribution, and determine the realistic choice of the functional orientationof China’s individual income tax.The second part is the inspection of China’s individual income tax legal system. Firstly,this section points out the problems in adjusting income distribution which reflect theweakening of adjustment function of China’s individual income tax: the levying mode isdifficult to reflect the principle of fairness, taxpayers are treated differently, the marginal taxrate is too high, expenses deduction standards are unreasonable, tax deduction and exemption are excessive. Secondly, it analyzes the reasons of the weakening of China’s individualincome tax’s adjustment function from the five aspects of history, cognition, organization,system and society, to clarify the ideas of China’s individual income tax legal system’simprovement.The third part is the research into advanced experience of foreign individual income taxlegal system. This section briefly introduces the individual income tax legal system in theUnited Kingdom, the United States, Australia, Japan, Korea and the other countries in threeaspects of legislative situation, design of tax legal system and tax collection, especially theadvanced experience of these countries in adjusting income distribution, such as “Taxpayers’Rights Protection Act”, expenses deduction standards considering family factors, taxincentives mechanism of self-declaration, which are all important references to improveChina’s individual income tax legal system.The fourth part is the specific path to improve the individual income tax legal system inChina. Firstly, establish a legislative thinking of “fairness priority”, raise the level oflegislative technique and speed up the enactment of substantive and procedural law of China’sindividual income tax; Secondly, promote China’s individual income tax reform bytransforming the categorical mode to the comprehensive mode, treating the taxpayers fairly,broad the tax base, reduce the levels of tax rates, lower the marginal tax rate and establish areasonable expense deduction standard; Lastly, improve the individual income tax collectionand management system through setting up the individual income tax withhold system andtax incentives system of self-declaration as well as improving the individual income taxinformation management system and individual income tax audit system.