The Research On Executing A Compatible Classified And Comprehensive Individual Income Tax System For China

Since the launch of national individual income tax in September,1980, the incometaxation system had changed constantly for the sake of adapting both social andeconomic development. Until now, the system of national individual income tax hadalready experienced six-time revisions. According to the authority, the latest revisionwas implemented by State Council at27th, July, corresponding to <the revision ofpracticing income tax in the People’s Republic of China>, which would apply publiclyfrom1st, September,2011.In terms of latest income tax’s reform, the tax exemption of payroll had alteredfrom2000RMB/month to3500RMB/month. In addition, it also conducted specificadjustment in the filed of tax rate schedule, as well as physical alterations such asincreasing tax exemption, enlarge range of income, and decrease the lowest tax rate thatwould regards to individual business, enterprise and contracted management. Suchregulations may pose practical effects on two perspectives as follows: the taxationbecame a more quantitative-basis; the taxation brought down taxation pressure by theconsideration of citizens. However, the reform of2011’s taxation only an outset thatmerely involved in payroll, individual business, enterprise, and contracted management,instead a termination which discuss other9types of incomes in national income taxsystem. Recently, China had undertaken income diversity, especially for those wealthy;the practicability of taxation reform had not fulfilled authority’s expectation. Thepossible reason is that two-kind incomes reformation would not comply with aquantitative-basis that imperfectly governs income function by individual income tax.This study intends to analyze both the consequence of taxation reformation inChina and further reformatory perspective based on theoretical framework of individualtax’s model, function, principle, gini coefficient, and income exponent. Additionally,this paper would examine the probability of equipping up systematic taxation innational-wide. From the comparative viewpoint, this paper explores the designation of tax rate schedule of systematic taxation in terms of various circumstances, which wouldbe learned from taxation system of declaration in American household. What’s more,this paper contributes to existing literature in the following ways: it specificallyanalyzes the absent effects of national individual taxation on the foundation ofquantitative-basis and income accommodation, such as non-consideration of externallyimpartial but internally unfairness as the result of family situation, the disappearance ofincentive mechanism for actively declaration, as well as deficit of disciplinary effectsfor illegal activities. Author believes that it is worthy to study tax rate schedule on thecombination of indexation in those advanced countries, e.g. U.S. Also, it mayimplement a uniform tax exemption in the national-wide and proceed indexationadjustment based on national price index.