Research On Tax Compliance Of Personal Income Tax Based On Prospect Theory

The tax revenue is the main source of the national finance.It's of great significance to ensure that tax revenue to the state treasury can be collected timely and adequately.It can guarantee finance better function of resource allocation,income distribution and keep the economy stable.There are many factors influencing the tax revenue,and tax compliance is one of the important factors affecting the tax revenue.The personal income tax is one of the important sources of national tax revenue.But China's current personal income tax compliance situation is not optimistic.And tax evasion is serious.It will directly affect our country personal income tax to raise tax revenue,fair tax and keep economic stable.In recent years,national tax department also repeated reform in order to improve the level of the personal income tax of tax compliance.These measures will help reduce the burden of low-income earners and improve taxpayers to comply with tax compliance.But,the phenomenon of tax evasion is still serious in our country.And these policies have not completely changed the taxpayer's tax compliance.The tax compliance of former research,most scholars pay attention to the tax system design level and the study on the level of tax collection and administration.But they don't take into consideration of the taxpayers' tax behavior psychological factors.So,this article will use prospect theory of behavioral economics,and take the taxpayers' psychological factors into consideration.This paper will use the theory of behavioral economics to consider the psychological factors of taxpayers and construct taxpayers'compliance model.This paper is divided into five parts.The first part is the introduction.This section will mainly introduce research background,research purpose and significance,research methods,research status both at home and abroad as well as the research method of paper.Finally,summarize this article innovation points and the insufficiency.The second part is to comply with the relevant concepts and theoretical basis.Firstly,the concept and connotation of tax compliance are defined,and then,according to the different performance or compliance reasons of the taxpayer's tax behavior,the tax compliance behavior and non-compliance behavior are classified into different types.Finally,the factors that affect the taxpayer's tax compliance are summarized,and the significance of the selection rate,penalty rate,social credit loss coefficient and herd effect as the research factor are analyzed.The theoretical basis leads to the prospect theory by introducing the expected utility theory and the tax confusion explained under the A-S model.And the theoretical basis describes the theoretical content of the prospect theory and the theoretical advantage of choosing the prospect theory.The third part is the analysis of the present situation and reasons of the current personal income tax compliance in China.And this part describes China's current personal income tax compliance from different perspectives and analyzes the causes of the present situation.The fourth part is based on prospect theory to establish the model of tax compliance.Based on prospect theory,the model selection of the four factors that influence the taxpayers' tax decision respectively analyzes the taxpayer social credit loss coefficient,penalty rate,tax rate,and conformity effect and the relationship with the taxpayers' tax compliance.The model results show that the social credit loss coefficient and punish rate is positively related to the taxpayers' tax compliance;Under certain conditions rate is negatively related to the degree of tax compliance;Bandwagon effect will influence the existence of the taxpayer's tax decisions,Tax authorities can change the expressions of tax audit report to improve the taxpayer's tax compliance.In the last section,the practice of raising tax compliance in several typical countries is introduced.The fifth part is the policy recommendations section of the article.