Research On Expense Deduction Of Individual Income Tax In China

Individual Income Tax is a typical kind of direct tax, the tax burden is taken by the person who obtain the taxable income of directly,and can not be transferred easily, so it is called "good tax",and it is the most closely related tax to the immediate interests of the people.Individual Income Tax is only levied on pure income,and the necessary cost is deducted from the gross income before tax,the expense deduction amount will directly affect the calculation of the taxable income in the later period,therefore,the study of the expense deduction has been a very important aspect in the research of the Individual Income Tax.China began to levy Individual Income Tax in 1980,and carried on the reform in 1993,until at the present stage,although the expense deduction of the wage and salary has been adjusted several times,however,with the development of economy,and the change of price leveljust confined to the expense deduction of the wage and salary,and the expense deduction of the other income never been changed for the passed20years,it is clearly unreasonable.At the same time,with the growing diversification of individual income sources,while residents income gap is also widening,in this context,the issue of expense deduction of Individual Income Tax is gradually highlighted.In view of the above background,this paper discusses the problem of expense deduction of the Individual Income Tax,Under the background of taking the combination of comprehensive and classification taxation mode in the future,and puts forward the system design scheme.Based on the using of standard analysis, quantitative analysis and comparative analysis, this paper starts from the Individual Income Tax taxable income, combined with different views, analysis the meaning,theoretical basis,types,methods and standards of the expense deduction. Trying to analyze the problems in the present stage of our country and provide the theoretical basis for the improvement.Through the review of the development track of Individual Income Tax in China, the paper believes that China's current Individual Income Tax levied by classification mode, started to show a lot of drawbacks,firstly, the kind of expense deduction is not perfect, paying no consideration to the family,does not reflect the principles of the amount they can afford,and did not design special expense deduction,as China's household spending in education,health care,housing and other rising year after year, it is clear that missing expense. deduction,not only does not meet the needs of social development,but also increase the taxpayer's tax burden to some extent;secondly,the methods of expense deduction is simple,resulting in lack of fairness of the tax,which will cause higher income taxpayers can use more expense deduction and pay less tax,by comparison,lower income taxpayers can use less expense deduction and pay more tax,;finally,the standard of expense deduction is not consistent in domestic and foreign,neither in line with the international common practice,but also in violation of the principle of national treatment of WTO.In order to solve solve the problems in the current expense deduction of the Individual Income Tax,and puts forward a better scheme design,this paper based on the situation of our country, discusses the different ways of other countries in the world,concluding enlightenment for the future expense deducting reform in China.The target of the expense deduction reform in China,is to built the combination of comprehensive and classification,thus the reform can not be only limited to revise tax elements,but to carry out a series of fundamental changes under the combination of comprehensive and classification taxation mode.This paper argues that China should implement the combination of comprehensive and classification taxation mode in the future,11 items of income in turn divided into three categories:labor income,capital income and other income.Taking comprehensive taxation on labor income,and taking classification taxation on the other income.During the research,under the premise of following the basic principles,study the types,methods and standard of expense deduction,based on the other country's experience,proposing the family coefficient and expense deduction indexation,integrate family structure,price level and other factors into the expense deduction,through the measurement of the data,calculate reference values for the expense deduction in the future,try to promise the expense deduction be scientific and reasonable.