Research On The Effect Of The Special Additional Deduction System For Supporting The Elderly In China

Individual income tax is a type of tax that is levied on the income earned by the taxpayer.Therefore,it is naturally closely related to the interests of individuals.From the perspective of income,individual income tax is the fourth largest tax in China and it also undertakes the functions of adjusting income distribution,narrowing income gap and promoting social equity.Coupled with the deepening of the aging degree in China in recent years,the pressure of child support is increasing.In order to reduce the burden on taxpayers,promote social fairness,and improve China ’s tax system,in 2019,the individual income tax officially began to implement six special additional deductions,including supporting the elderly.Therefore,this paper focuses on the special additional deduction for supporting the elderly in individual income tax,discusses the implementation effect of the special additional deduction for supporting the elderly from the two aspects of tax reduction effect and income distribution effect,and puts forward reform suggestions.Starting from the relevant concepts and principles of special additional deductions,this paper sorts out the reasons for the introduction of the special additional deduction system,and analyzes the tax reduction effect and income distribution effect of the special additional deduction for supporting the elderly.Secondly,this paper calculates the tax reduction effect and income distribution effect of the special additional deduction for supporting the elderly through CFPS data,and further analyzes the problems existing in the special additional deduction system for supporting the elderly on the basis of the calculation.Finally,by sorting out the relevant deduction policies of the United States,Germany,Japan,and Hong Kong in China,as well as other policies and measures in various countries(regions) to deal with aging,summarize experience and put forward countermeasures.Combining theoretical and empirical analysis,this paper finds that the tax reduction effect of the special additional deduction system for the maintenance of the elderly is no doubt,but it weakens the income distribution effect of the individual income tax system to a certain extent.The reason is that the system of additional deductions for special items for the elderly has problems such as unreasonable range of deductions,failure to take into account income and regional differences,and inflexibility of the deduction standard.Therefore,this paper puts forward some suggestions for supporting the elderly from three aspects of promoting the tax reduction effect,income distribution effect and improving the adjustment mechanism of the policy,referring to relevant international experience and combining with the actual situation of our country.