Research Of Individual Income Tax Reform With Family As A Unit

The personal income tax is a kind of direct tax levied on all the income acquired by individuals. In 1980, China’s personal income tax law was born, and went through six important amendments in the later 30 years. At present, the revenue of China’s personal income tax is growing year after year, and its position in all the kinds of taxes is increasingly prominent. With the gap between rich and poor widening, the role of the personal income tax in adjusting income distribution is widely concerned,the whole society is looking forward to the reform of the income distribution system, and the personal income tax reform attracted widely attention from the theoretical circle. Because tax unit determines the specific content of the elements of a national personal income tax system,and therefore the choice of tax unit is an important issue of the personal income tax system.All along, the tax unit of China’s personal income tax is individual.Based on this,people design the exemption amount and the rate schedule,and levy taxes on people according to their ability. However, the individual’s ability to pay the personal tax is not only relevant to himself,but also to his family. Single individuals and married couples have different ability to pay their personal tax, and so do the double-income households and the families in which only one person makes money. So we should take the variables relevant to the family into considerationwhen measuring individual’s ability of paying tax. Personal income tax system base on family unit deserve us to pay more attention on it. This paper call for the reform of individual income tax with family as a unit.Only by regarding a family as a unit can we measure the true ability of taxpayers to pay taxes.Firstly, this paper analyzes the current status and the problems of the personal income tax system that regards the individual as the tax unit. Secondly, I describe the characteristics of personal income tax system base on family unit and individual unit, and compares them with each other. On this basis, this paper makes an in-depth analysis of the basic issues and difficult problems of the personal tax reform. The issue is the definition of nuclear family unit, and by drawing on the experience of the United States and France, we can determine the principles and methods of defining the family tax unit. Also, I describe some methods needed by the reform of individual income tax with family as a unit.The difficult problem is how to maintain a neutral tax on marriage. Then, this paper describes the direction of personal income tax reform based on the family unite and then compares the old tax system with the new. Finally,through the case study I comes to the conclusion that levying a tax based on family unit can better ensure that the same tax burden the same family,and also the conclusion that a tax based on family unit is better in line with the principle of "levying taxes according to one’s ability andensuring fair tax". In the meantime, this paper also analyze the disadvantages of levying a tax based on the family unit, and that is to say the marriage subsidies and marriage penalties.The ultimate aim of this paper is to propose the idea that the personal income tax reform should be based on the family unit, and come to the basic idea about how to choose and design the personal income tax unit.