Comparison of the Chinese and American Personal Income Tax Abstract: This article is a comparison between China and America in the personal income tax system. First of all, the first part is about the basic theory of individual income tax system such as basic function, tax model, tax unit and method. Then it compares America personal income tax system with China. Lastly in consideration of present situation, how to perfect and improve our country’s personal income tax system.
1. Comparison of the Chinese and American history
of personal income growth 1.1 Chinese history of personal income growth It’s slow and difficult that China established the process of personal income tax legal system. In 1936, personal income tax law system initially established in China. In 1980,the “People’s Republic of China Individual Income Tax Law enacted, which is China’s first personal income tax law. After tax reform, the status of personal income tax is improved in our country. In order to adapt to the development of the economic situation, from 2005 to 2011, individual income tax threshold raised three times.
1.2 American history of personal income growth
The U.S.A personal income tax law system established in1913, through the efforts of the parties, nowadays, American personal income tax legal system have became more perfect. Tariffs as the main indirect stages, commodity tax as the main phase of the complex tax system and income tax as the main complex are the three stages of development period during American tax system. After WWII, in order to achieve the plan of the economic recovery, tax reform is still around the tax cut in America.
2. Personal income tax system of China and the United
States 2.1 Taxpayers comparison China's personal income tax payers in order to obtain the taxable income of the individual taxpayer. In accordance with international practice to determine the scope of taxation, according to the principle of territoriality and the double taxation of personal jurisdiction. The latter can be divided into the jurisdiction of its residents and citizens jurisdiction. Citizens from the jurisdiction is defined in the law as the standard of citizens; residents of the jurisdiction of residence and length of residence in order to define a double standard. Our tax law, have domicile in China, or no shelter but within one year of personal residence, income derived from sources within China and abroad, should be subject to personal income tax law; in China neither domiciled nor resident or non-residence but living in the territory of less than one year, the income derived from sources within China, but also should pay personal income tax law. The resident and nonresident taxpayers into two categories: resident taxpayers unlimited tax liability on its territory from China, foreign income tax; non-resident taxpayers with limited tax liability only on their taxable income from sources within China. U.S. personal income tax, based on whether a U.S. citizen as a standard dividing taxpayers. U.S. citizens or residents came from the United States or around the world all the income tax. For foreign residents, only income tax on its substantive relations with the United States to obtain the cause. U.S. citizen, born in the United States means the United States citizens or their parents, or who have joined the American nationality. Foreign individuals have to meet the following conditions deemed U.S. residents: ① allow long-term legal residents; ② year for a few days × 1 + year Stay × 1/3 + years ago for a few days × 1/6 ≥ 183 days.
2.2 Compare the tax base
U.S. personal income tax in the consolidated income for the tax base, tax object is quite broad, in addition to the tax exempt items clearly defined , and the rest comes from various sources of income , including not only monetary income , but also includes a variety of in-kind income and assets value-added , gross income before deducting never see , such as the salaries of labor remuneration , interest dividends, rents royalties, profit sharing , alimony pension income included at least one kind of personal income , individual income tax. Compared with the U.S, our tax base is not wide. The main features: First, the tax law tax relief projects too, eroded the tax base. Second, China has taken the form of tax law specifically enumerated. Proceeds are listed in Class 1, the need to pay taxes, and the proceeds outside of class one would not pay taxes. But in real life there is a considerable part of their income, it is difficult to include it in taxable proceeds from Class 1, which is part of the revenue through what channels, which take the form of acquisition, the proportion of how much is difficult to ascertain, and the rapid growth of population has become the rapid expansion of the income gap, the main reason for the formation of unfair distribution, a tax and can not adjust for this.
