Personal income tax is not only an important source of increasing national fiscal revenue, but also an important means to adjust personal income distribution. In recent years, with the widening income gap between residents in China, the reform of individual income tax system has become one of the hot issues of social and academic concern. With the improvement of China's economic operation quality and people's income level, the tax revenue of personal income tax has also increased substantially, and has gradually become one of the important sources of 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. "Reducing the current personal income tax rate of 654.38 million yuan from 45% to 30%" is also out of this consideration. Therefore, China's personal income tax reform plan, which has been brewing for many years, has been implemented since June 2006 at 65438+ 10/,which has raised the wage income expense deduction standard from 800 yuan to 1 600 yuan, which has lasted for more than 20 years. 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 effective 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. The adjustment of personal income tax has produced 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 the 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, the personal income tax in 2004 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. 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 income gap, increase the adjustment of high-income people, and introduce new measures and means in collection and management. The "Regulations for 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 it 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.

Therefore, reducing the current monthly personal income tax rate of 654.38+10,000 yuan from 45% to 30% will help the working class, led by white-collar workers, make greater contributions to China's social economy.