Research On Individual Income Tax Compliance Based On Prospect Theory

Tax revenue is an important source of fiscal revenue in China,and tax compliance has always been the focus of research in the tax field of all countries in the world.Personal income tax is one of the key,it can narrow the social income distribution gap,which is to promote economic stability and achieve social equity is full of positive significance.In recent years,China's individual income tax revenue,although growing fast,but the loss of serious,so the individual income tax compliance situation is not optimistic.In this context,the analysis of taxpayers' tax compliance behavior,on the one hand,can help the reform of individual income tax,on the other hand,can also reduce the loss of tax so as to ensure the tax revenue,the formation of a good tax environment for self-declaration tax payment.Therefore,it is particularly important to study the loss of individual income tax and how to improve tax compliance.However,the study of tax compliance is the first to analyze the status quo of tax compliance in China.At present,for China's individual income tax,there are mainly problems such as low collection and management efficiency,weak tax awareness of citizens,poor tax environment,etc.,and the consequences of these problems will be directly reflected in the change of individual income tax.Therefore,this paper sorted out the scale change and structure proportion of China's personal income tax revenue by consulting relevant fiscal and tax data,and estimated the scale of China's personal income tax loss,and analyzed the reasons for the loss of these taxes.The reasons for the loss of individual income tax in China are mainly divided into three aspects: lossof system tax,loss of implementation tax and lack of tax compliance of taxpayers.Based on the above theoretical analysis of individual income tax compliance,this paper constructs a tax compliance model based on prospect theory and makes relevant analysis.And prospect theory model is different from traditional A-S model,which based on the taxpayer is A limited rational economic man hypothesis,the taxpayers in the decision-making process of integration into the different psychological considerations or value,thus established the combination of behavioral economics analysis framework,this to make up for the defect of traditional expected utility theory.At the same time this paper has analyzed the tax loss of the three major reasons,selected from the penalty rate,rate of inspection,tax rate,conformity and taxpayer reputation credit costs and other factors,combined with the prospect theory to these factors and the formulation of mathematical modeling,the behavior of tax analysis of tax compliance with changes in the relationship between them.Finally,according to the analysis of the model,it is concluded that there is a positive correlation between the penalty rate and audit rate and the reputation and credit cost of taxpayers and tax compliance,while there is a negative correlation between tax rate and tax compliance.Meanwhile,it shows that the herd mentality will also affect the tax compliance of taxpayers.Finally,based on the theory and model analysis of tax compliance mentioned above,this paper proposes relevant policy Suggestions on improving the compliance degree of individual income tax from the perspectives of strengthening tax collection and management,perfecting tax system and cultivating tax environment in light of the three aspects of taxpayers,tax authorities and social atmosphere.