Improvement Of Special Additional Deduction System Of Individual Income Tax Law In China

In August 2018,I,the Standing Committee of the National People’s Congress revised the Individual Income Tax Law.In December 2018,The State Council issued the Notice of Interim Measures on Special Additional Deductions for Individual Income Tax,which explicitly included children’s education,continuing education,medical treatment for serious diseases,housing loan interest,housing rent and supporting the elderly.In March 2022,the Notice on The Establishment of Special Additional Deduction for Individual Income Tax for Care of Infants and Children Under the Age of 3 was issued,adding care items for infants and children under the age of 3.Since then,China’s special additional deduction system contains the above seven items.This system helps to reduce the tax burden of middle and low income groups,solve their living difficulties and reflect legal fairness and justice.However,there are still some problems in this system,such as unclear purpose of deduction,"one size fits all",unscientific scope of deduction,and undetailed deduction standard.Therefore,it is of certain theoretical and practical significance to carry out the research in this aspect,to perfect the legislation of the country,to realize the fairness of tax burden,especially to help the survival and development of the low and middle income groups in society,and to achieve common prosperity.The establishment of the special additional deduction system is aimed at the state’s transfer of fiscal and tax revenues to solve the basic subsistence difficulties of low-and middle-income groups.If there is no deduction for education,medical care,housing,and old-age care for low-and middle-income groups,their basic survival and life will be seriously threatened,affecting their enthusiasm for labor production,and then endangering national security.Therefore,it is necessary to run the purpose of deduction through the whole process of the implementation of the special additional deduction system,and determine the deduction object,deduction scope and deduction standard according to the deduction purpose.Reasonably distinguish between special additional deduction objects and implement different deduction treatment.Taxpayers’ income varies widely,with incomes ranging from high to low.According to the current legal provisions,the annual comprehensive income of more than 960,000 yuan is a high income,which far exceeds the minimum living standard of residents,while the income of low-income people cannot guarantee the basic subsistence life.Therefore,it is necessary to distinguish the objects of deduction,implement different deduction treatment,and do not implement special additional deductions for high-income groups.Otherwise,not only will it not narrow the polarization,but it will widen the gap between the rich and the poor.Use the negative income tax system to solve the living difficulties of the subject who can not be deducted.The subjects of "no deduction" are those whose monthly comprehensive income does not reach the threshold.They belong to vulnerable groups in society.Special care should be given through financial subsidies and government subsidies to make their taxable income negative and improve their work enthusiasm.Use the negative income tax system to solve the survival and living difficulties of the "deduction cannot" subjects.The main body of "deduction cannot" refers to those groups whose monthly comprehensive income has not reached the threshold or has no stable source of income and cannot be deducted.The law is universal,and all citizens of a country should be treated equally,and these large groups that cannot be deducted are also Chinese citizens and deserve to enjoy the deduction treatment.This problem can be solved by the negative income tax system,that is,the government uses the form of tax to calculate subsidies according to the rate of difference between the actual income of low-income earners and the need to maintain a certain standard of living.The negative income tax system is a system used by many developed capitalist countries to solve the difficulties of low-income groups in subsistence and life,and has great benefits for stabilizing social order.Therefore,this system can be used to solve the same problems in our country.Expand the coverage of special additional deductions.The seven special additional deductions currently determined do not cover the entire survival and life of low-and middle-income groups,and cannot fully achieve the purpose of deduction.Therefore,in order to improve the coverage of the special additional deduction system,it can be considered to increase the deduction of major disaster accident losses and enhance people’s ability to resist risks;we can consider increasing the deduction of fertility expenditure to stimulate the endogenous motivation of fertility.Of course,these scopes are not boundless,and are limited by the purpose of deduction and the financial resources of the state.Optimize the special additional deduction standards,and implement a dynamic adjustment mechanism for tax indexation.Except for serious illness medical treatment,the remaining six items are all deducted by fixed amount,which cannot take into account personality differences.Deductions can be determined according to the rise and fall of the consumer price index,weaken the negative impact of inflation,and achieve humane and differentiated deductions.