Mental Account Analysis Of Chinese Personal Income Tax

The appearance and development of the behavioral finance provide theoretical basis for research on micro individual decision making in fiscal and tax fields.Economists combine psychology especially behavior science theory into the research in finance and tax fields, provide a new perspective for the development of finance and taxation theory. As the current tax compliance level is in low status, it is particularly important to strengthen the cognitive attitude of taxpayers.What is more, in the perspective of tax evolution,the source of tax revenue changed from land to corporate profits and then to personal income.It is actually a process of gradually increasing difficulty to master for tax authorities.While the more modern tax system is, the more requirements for the government to respect taxpayers’ interests and choices. And it is more necessary to establish an effective social contract in order to better promote the construction of modern taxation system.Personal income tax is an important tax in our tax system, it plays an irreplaceable role in raising financial funds,adjusting income distribution and stabilizing the economic operation. However,with the development of economy, the improvement of people’s living level, the current personal income tax system is not sufficient to satisfy the taxpayer’s expectation, and its lack of the fair principle is gradually reflected. So it has become the inevitable trend to further optimize the tax system in the development of personal income tax.However, the good operation and smooth reform of any taxes all need the joint efforts of both sides. Especially personal income tax, which is more directly related to the taxpayers,is the reflection of an uncertainty reflected conditions judgment and decision.It is not only driven by economic interests, but also affected by many kinds of psychological factors.Therefore, this paper attempts to combine the mental accounting theory and the traditional theory of personal income tax,according to division and analysis of taxpayer’s of mental accounting,and study the process of psychological perception of the taxpayers of different personal income tax patterns, tax units and the expense deduction standard systems.And then, design better personal income tax system based on the conclusion of the study, thereby increase the level of tax compliance and promote the smooth reform of the tax system.