Research On Tax Unit Of Individual Income Taxation Of Our Country

Along with the development of society and economy, great changes have taken place in the external environment that the individual income tax depends on. The problems of adjustment of the individual income tax on the income gap and the fairness in the field of income distribution have become inevitable issues in the process of economic transition in China. There are many defects and deficiencies existing in the current individual income tax system and it doesn’t perform well in the secondary distribution. Therefore further reform is needed in the individual income tax system. The reform of individual income tax system in our country needs to combine the present situation of the economic and social development.The choice of tax unit is choosing family or individual as the individual income tax to design the pre-tax deduction standards and tax rate structure. As the choice of the tax unit is directly related to the design of tax factors, it has a significant role in the design of the individual income tax system.Currently, the tax unit of individual income tax in our country is individual. It needs to be reformed badly as it is against the tax principle of fairness. Family based individual income tax can embody the tax principle of fairness better. So, family instead of individual should become the tax unit of individual income taxation of our country. Starting from this goal, this paper uses those methods of comparative analysis, theory with practice. On the basis of theoretical analysis on the design of individual income tax system, excavate the problems existing in the current individual income tax system in our country fully. And analyze their advantages and disadvantages of these two kinds units of family and individual implementing in our country. Then combine the tax reform process and practical experience in other countries for reference and our country’ current national conditions and practice of the reform of our country to analyze the necessity and feasibility of implementing family based individual income tax system. Explicitly point out that along with family based system replacing individual based system, the existing classified income tax system should transform to comprehensive income tax system. Lastly, carried on a detailed discussion on the design of the specific elements involved family based income tax system, such as the definition of the family, pre-tax deduction, collection and management conditions and the construction of supporting facilities in order to help to promote the implement the family based system in our country.