Keywords: personal income tax expense deduction standard consumption theory reform effect
Personal income tax is a kind of tax levied on taxable income obtained by individuals (natural persons), which is the product of the development of market economy. With the deepening of China's economic reform and opening up in recent years, the tax revenue of personal income tax has also increased substantially with the improvement of China's economic operation quality and people's income level, and has gradually become one of the important sources of income for local finance. However, 75% of the personal income tax collected by the state comes from low-and middle-income people, which obviously runs counter to the original legislative purpose of personal income tax. Therefore, China's personal income tax reform plan, which has been brewing for many years, was implemented in June 2006 at 65438+ 10/. For more than 20 years, the deduction standard of wage income and expenses has been raised from 800 yuan to 1600 yuan. Although the increase of expense deduction standard will bring short-term tax reduction, in the long run, personal income tax is still one of the taxes with the greatest tax growth potential in China. Furthermore, the improvement of the deduction standard of wage income and expenses will increase the disposable income of the middle and low income classes, increase the effective social demand, thus stimulating domestic demand, promoting economic growth, forming a benign interaction between taxation and economic growth, helping to narrow the income gap, and reflecting the trend that the state actively encourages the expansion of consumption and promotes economic growth. At the same time, high-income earners are required to declare and pay taxes on their own, which has increased the intensity of tax collection. This adjustment of personal income tax has had many positive effects.
First of all, the role of personal income tax reform is mainly manifested in the following points:
(A) to reduce the burden on the working class
In this personal income tax, the expense deduction standard of wage earners has doubled from 800 yuan to 1600 yuan, which is not based on adjusting the income gap, but to reduce the tax burden of wage earners and increase consumption. According to the calculation of relevant departments, the monthly consumption expenditure of urban residents in China is 1 143 yuan, and the deduction fee is determined as 1600 yuan, which makes the low-and middle-income people have a slight balance after ensuring the basic expenditure is met, which is a reasonable adjustment in line with the growth of residents' income and living expenses. Prior to this, wage earners had to pay income tax before their basic living needs were met, which was obviously unreasonable and did not meet the purpose of developing the economy and "continuously improving people's material and cultural living standards". The direction of this tax reform is tax reduction. After raising the expense deduction standard, the personal income tax burden of a considerable number of low-income people will be reduced, or even no personal income tax will be paid at all.
According to statistics, in 2004, China's personal income tax reached173.705 billion yuan, of which 65% came from the working class. After the deduction standard of wage income and expenses is raised to 1.600 yuan, it is estimated that the fiscal revenue may be reduced by 28 billion yuan, which means that the working class can reduce the tax burden by 28 billion yuan every year, which means that the working class can increase the disposable income by 28 billion yuan. According to the principle of tax multiplier, a tax reduction of 28 billion yuan can form a social demand of112 billion yuan. According to State Taxation Administration of The People's Republic of China's prediction, after the expense deduction standard is raised, the personal income tax in China will be reduced by about17,370.5 billion yuan in 2004.
(2) Intensified the collection of high-income people.
Personal income tax is the tax that can best reflect the adjustment function of income distribution gap in China's current income tax. While reducing the tax burden of low-income people, the key to personal income tax collection and management is to give full play to the role of personal income tax in adjusting the widening income gap, increase the adjustment of high-income people, and study new measures and introduce new means in collection and management.
The revised individual income tax law puts forward the content of collecting and managing the rich. The "Regulations on the Implementation of the Individual Income Tax Law of the People's Republic of China" proposes to strengthen the tax collection and management of high-income earners, and change the previous single declaration to double declaration, that is, the taxpayer's unit will withhold individual income tax on his behalf, and the high-income earners' work units and themselves will declare to the tax authorities, otherwise it will be considered illegal. According to the regulations, all withholding agents must apply for full withholding declaration, forming a supervision system of double declaration and cross-examination for high-income earners, which is conducive to strengthening tax collection and management of high-income earners and plugging loopholes in tax collection and management. In the implementation regulations, high-income earners also have a clear definition: "individuals whose annual income exceeds10.2 million yuan".
Narrow the income gap and reduce the Gini coefficient
The level of regional economic development in China is unbalanced, and there is a certain gap in the income and living standards of residents everywhere. Unifying the deduction standard of wage income and expenses throughout the country is conducive to promoting regional equity. If high-income areas implement high-cost deduction standards and low-income areas implement low-cost deduction standards, it will aggravate the imbalance between regions and run counter to the original adjustment significance of individual taxes. At present, the implementation of unified tax standards in various places will bring great benefits to the western region with low income. A considerable number of middle-and low-income classes in the western region will not have to pay personal income tax, and the tax burden of taxpayers in this region will be reduced, which is conducive to encouraging consumption and promoting economic development in backward areas.
Personal income tax can best adjust the income distribution gap and balance income twice among all taxes. The rich and the poor are the two ends of the wealth distribution chain. To narrow the gap between the rich and the poor, we must divide some wealth from the rich and subsidize the poor. In China, the gap in personal income distribution has been widening for more than ten years, and the Gini coefficient has reached 0.45. According to international practice, the Gini coefficient reaches or exceeds 0.4, indicating that the gap between the rich and the poor is too large. The prominent gap between the rich and the poor and the failure of the personal income tax system are causal relations. Statistics show that the working class is the main taxpayer of personal income tax in China. In 2004, 65% of personal income tax income came from the working class, which violated the recognized "28 Law". The rich in China account for about 20% of the total population. It accounts for 50% of the total income or consumption, but the contribution of these 20% rich people to personal income tax is only 10%. This fully shows that the individual tax has not achieved the "adjustment" from the rich to the poor. On the contrary, this secondary distribution of wealth is still in a "countercurrent" state. Under the long-term "countercurrent", only the rich get richer and the poor get poorer, and the gap between the rich and the poor will continue to widen. Some people say that the tax burden of the rich in China is the lightest in the world. Only through the government's tax enforcement means is the most effective way to complete the "adjustment".
Compared with China's "system failure", Singapore's tax policy can undoubtedly be used for reference. The Prime Minister of Singapore issued a tax report saying that the personal income tax paid by the wealthy Singaporeans, who account for 20% of the total population, accounts for 93% of the total personal income tax, which means that all taxes are basically borne by the rich. In addition, the Singapore government provides various subsidies to citizens, 80% of whom have net income after the subsidies and taxes are balanced; Only the rich 20% are net payers. In 2003, the average net expenditure of the rich was S $43,000. The rich bear almost all personal income tax obligations, and the government will redistribute the poor through subsidies and other means after collection; The rich pay their obligations in tax activities and the poor get benefits in tax activities-this is a normal and effective tax "regulation" state. China public's expectation of narrowing the gap between the rich and the poor and realizing "* * * common prosperity" is largely pinned on the return of the tax system. The tax system has an important guiding role for the majority of middle-income groups, and the principle of action is "limiting the height, promoting the middle and reducing the price". Increasing the levy on high-income people will obviously reduce the Gini coefficient. Second, the effect of personal income tax reform-the effect of personal income increase
(A) the impact of income changes on consumption
As mentioned above, the reduction of national personal income tax means the increase of disposable income of working class. According to the study of national income in western economics, consumption is a function of income. Residents' income level, expectation of future income and immediate purchasing power determine the size and strength of consumer demand to a considerable extent. Macroeconomics research on residents' consumption behavior can be roughly divided into three stages: the first stage is Keynesian absolute income hypothesis; The second stage of life cycle theory, lasting income theory and relative income theory; Hall random walk hypothesis in the third stage, and a large number of other hypotheses caused by it. These theoretical viewpoints provide reference and ideas for us to study the consumption behavior of China residents.
1. consumption theory
(1) Keynesian absolute income hypothesis. Keynes believed that in the short term, consumers' consumption behavior mainly depends on the amount of income. With the increase of income, people's consumption will also increase, and consumption is "completely reversible", but the growth of consumption is lower than that of income, and the marginal propensity to consume gradually decreases.
(2) Dilyani's life cycle hypothesis. This assumption first assumes that consumers are rational and can use their income for consumption in a reasonable way; Secondly, the only goal of consumer behavior is to maximize utility. In this way, rational consumers will arrange the proportion of income used for consumption and savings according to the principle of maximum utility and their life expectancy, that is, everyone will arrange their own consumption expenditure according to all the expected income of their life. Consumption does not look at a person's current income, but at a person's lifetime income.
(3) Friedman's hypothesis of sustained income. Friedman divided personal income into permanent income and temporary income. Continuous income is stable normal income, and temporary income is unstable unexpected income. Friedman believes that what determines people's consumption expenditure is their lasting and long-term income, not their short-term disposable income. Because short-term disposable income will be affected by many accidental factors, there is no stable functional relationship between people's consumption and short-term disposable income. In order to maximize utility, people actually consume according to their long-term income level.
(4) Duesenberry's relative income hypothesis. Duesenberry believes that on the one hand, consumers' consumption expenditure is not only affected by their own income, but also by the consumption behavior of people around them; On the other hand, consumers' consumption expenditure is not only affected by their current income, but also by their past income and consumption level.
The above consumption theory demonstrates the influence of income on consumption from different angles. Income, especially stable income, is indeed the most important factor affecting consumption, and this time, raising the deduction standard of wage income and expenses has increased the stable and lasting income of the working class.
2. Analysis of the impact of income on consumption
According to the data of the National Bureau of Statistics, in 2000, China's GDP exceeded 1 trillion US dollars, and its per capita GDP exceeded 800 US dollars. On the whole, it has jumped from the ranks of low-income countries in the world during the Eighth Five-Year Plan period to the ranks of lower-middle-income countries in the world. The China Academy of Social Sciences and the National Bureau of Statistics have both conducted national social stratum sampling surveys. The survey results basically show that the number of "middle class" in China has greatly increased, accounting for about 15%- 18% of the total population. With the rise of the middle-income class, China's consumption rate will continue to rise, which is expected to rise from 58% in 2002 to 65% in 20 10, and reach 7 1% in 2020, which is close to the level of developed countries.
The consumption tendency of the fast-growing middle-income class is to buy high-end and new-type goods, thus promoting the upgrading of consumption structure and industrial structure. Last year, China's per capita GDP exceeded $65,438+0,000, which is the starting line for consumption upgrading. At present, in the coastal developed areas such as Shanghai, Beijing, Guangdong, Zhejiang, etc., where the per capita GDP exceeds 3,000 US dollars and the middle-income class is "clustered", the performance of consumption upgrading is particularly obvious, and these areas have taken the lead in entering a well-off stage. In the consumption expenditure of the middle-income class, compared with 1992 in 2002, the living consumption tendency such as food and clothing decreased by 22 percentage points, while the enjoyment and development consumption tendency such as medical insurance, transportation and communication, entertainment, culture and education, and residence obviously increased by 17 percentage points. Investing in real estate, finance and insurance has become fashionable, and urban investors have gradually surfaced. According to Maslow's hierarchy of needs theory, these people have begun to pursue economic security, enjoyment and development, and a perfect investment and financial management plan will be very attractive to them. The savings expenditure of the middle-income class is changing to investment expenditure, and stocks, education and insurance have become the hot spots of their consumption. They are generally loyal to brands and have very mature consumption concepts. Recently, a company conducted a survey on the financial management of middle-income groups, and the results showed that in terms of recognition of the value of financial management tools, low-risk protection tools such as children's education funds, insurance and national debt increased the most. Middle-income earners have the highest marginal propensity to consume, which is 1. 1, that is, every increase in income of 1 yuan can drive consumption of 1. 1 yuan. Followed by: middle-and high-income people, the highest-income people, the lowest-income people, and the low-and middle-income people. Middle-income earners have become a sustained driving force for economic growth. This personal income tax reform has the greatest impact on middle-income people. About 250 million employees in China have reached the middle-income group. The growth of middle-income people will inevitably bring about the change of consumption, that is, the quality of life has received more attention, from the pursuit of quantity to the emphasis on quality; Due to the reform of personal income tax, the per capita disposable income will increase, the absolute amount of consumption expenditure will also increase, and the proportion of investment and consumption will also increase. These positive changes will in turn promote the adjustment and optimization of urban industrial structure and economic structure, especially the tertiary industry, rapidly increase the demand for the tertiary industry, promote the rapid development of the tertiary industry, and change the unreasonable situation of the low proportion of the tertiary industry in China.
Three. Concluding remarks
The wage income deduction standard has been greatly improved in 800 yuan, which is in line with the current development trend of China's rapid economic development and obvious improvement of economic strength, and embodies the purpose of enriching the country and enriching the people and developing the economy. This tax reform not only lightened the tax burden of the working class, increased the tax collection for high-income earners, narrowed the income gap, lowered the Gini coefficient, improved people's purchasing power, but also promoted economic development. The good effect of individual tax reform will certainly play a positive role in the development of national economy.