Research On The Expense Deduction System Of Individual Income Tax In China

Personal income tax, as a direct tax, is levied on the taxable income of taxpayers.It plays an important role in narrowing the wealth gap and increasing revenue. As the primary tax on adjusting income distribution,personal income tax,personal income tax is not only closely related to the vital interests of the taxpayer in social life, but also to narrow the social gap between rich and poor and alleviate social contradictions.In many developed countries,personal income tax is mature,which have a larger proportion of personal income tax.It’s their complete income tax that promote the function of adjusting.Expense deduction decides the tax base to determine the applicable tax rate and tax liability.Therefore,expense deduction is a key factor affecting the tax liability.There is no scientific integrity expense deduction system in our personal income tax since the personal income tax was imposed in 1980.Although it’s easy to raise tax revenues and protect China’s fiscal revenue,the current expense deduction system makes personal income tax functions are severely constrained,reduces tax efficiency and affects social harmony where there is a growing gap between rich and poor.There is an urgent reform of personal income tax,as the expense deductions.So it’s necessary to study the expense deduction system,analysing the features and defects of current expense deduction system by researching the principle of tax.Finally,giving suggestions after considering foreign expense deduction and China’s national conditions.The first part of the paper introduces the selected topic background, research object and significance,and describes the relevant literature on personal income tax, and a brief evaluation of the research results of this project.The second part makes an overview of the items,standards and ways of the expense deduction,and its fair and efficiency theory basis.The third part presents some characteristics of present situation of our country personal income tax expense deduction system like the deduction is not completed and detailed,the standard is not reasonable and lack of elastic adjustment and so on through several cases.The fourth part mainly aims to reference excellent foreign management methods by a large number of examples of their system of expense deduction.The last part draws a conclusion that it is high time we should take measures,like reforming tax mode,establishing a complete system of expense deduction and improving the level of tax collection and tax consciousness and so on to improve the defects of expense deduction system.