The New Plan Of Individual Tax Adjustment Highlights The Dual Trade-Off.

　　 On the one hand, we should reduce the burden of the working class and retain the top talent on the other hand.

There are twists and turns in individual tax reform.

The amendment to the People's Republic of China personal income tax law (Draft) has been discussed and approved by the Executive Council of the State Council and formally entered the deliberation of the Standing Committee of the National People's Congress. In April 22nd, it was reported that the twentieth session of the Eleventh NPC Standing Committee would not vote on the draft submitted by the State Council, and it would enter the second instance stage after reviewing the relevant opinions and revising the draft.

On April 20, 2011, at the twentieth session of the Standing Committee of the Eleventh National People's Congress, Xie Xuren, Minister of finance, explained in the draft that the cost of the proposed bill was raised from the current 2000 yuan / month to 3000 yuan / month. At the same time, the progressive rate of 9 of the current wage increase was revised to 7, and the time for declaration and payment of tax was extended.

In response, Jia Kang, director of the Institute of Fiscal Science of the Ministry of finance, pointed out: "this adjustment is reflected. Income distribution optimization The basic direction. The revision also weighed the factors such as attracting talents and so on.

　　 The origin of 3000 yuan threshold

Data released by China's National Bureau of statistics in April 15th showed that consumer prices (CPI) rose by 5.4% in 2011 March. Statistics show that in the first quarter, consumer prices rose by 5% over the same period. Among them, the city rose by 4.9%, and the countryside rose by 5.5%.

Not only that, from the "garlic you ruthless", "beans you play", "Jiang You army" to "sugar high", "oil you up", "Ping what" and other emerging new words, but also reflects the economic background of food relay prices.

Therefore, "wage increase" has become an urgent demand for the working class, but it is worth noting that in the context of excess liquidity, the consequences of simple wage increases are likely to be a further rise in food prices, or even inflation.

Insiders say that the regulatory role of tax levers is obviously direct and effective in order to satisfy the needs of the working class to increase disposable income.

The head of the Ministry of Finance and the State Administration of Taxation pointed out that when answering reporters' questions on the draft related questions, he pointed out: "the income from personal wages and salaries is the amount of taxable income after the deduction of certain expenses per month. The purpose of reducing the cost of wage income is to embody the basic principle of living expenses without paying taxes. When the cost of maintaining the basic livelihood of the residents has changed considerably, the cost reduction standard should also be adjusted accordingly.

According to the reporter, this adjustment is still used "urban residents' consumption expenditure" indicators to measure. This index includes both basic living expenses and other expenditures for non essential necessities, including expenditures for increased prices, as well as increases in living standards. Therefore, consumption expenditure is greater than basic living expenditure.

According to the statistics of National Bureau of statistics, the per capita consumption expenditure of urban residents in China in 2010 is 1123 yuan / month. According to the average burden of 1.93 people per worker, the per capita consumption expenditure of urban employees is 2167 yuan / month. In 2011, according to the average increase of 10% of the per capita consumption expenditure of urban employees, the monthly consumption expenditure per capita of urban employees was about 2384 yuan.

In this way, the draft will increase the cost reduction standard to 3000 yuan / month, taking into account the current consumption expenditure of residents, and also considering the growth of consumer spending in the next few years. After adjustment, the proportion of the workers earning the income from the total wage income decreased from 28% to 12%.
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Individual businesses are also beneficiaries.

The tax adjustment, public opinion will generally focus on the tax threshold from 2000 yuan to 3000 yuan on this move. In fact, there is another bright spot in this draft: adjusting the secondary level of income tax rate. This will effectively play the role of tax in regulating income distribution.

"The draft will be the 9 level of the current wage income. Excess progressive tax rate Revised to 7, the 15% and 40% two tax rates were abolished, and 5% and 10% two low tax rates were applied. The amount of monthly taxable income corresponding to the first grade 5% tax rate is extended from the current no more than 500 yuan to 1500 yuan, and the monthly taxable income corresponding to the second grade 10% tax rate is extended from the current 500 yuan to 2000 yuan to 1500 yuan to 4500 yuan. At the same time, the draft also expanded the coverage of the highest tax rate of 45%, and the taxable income of the current 40% tax rate was incorporated into the 45% tax rate, which increased the regulation of the high income earners.

The head of the Ministry of Finance pointed out: "this revision of the individual income tax law, the implementation of the linkage between the increase of the wage deduction standard and the adjustment of the income tax rate structure, aims at simplifying and improving the tax system, so that the vast majority of the wage earners can enjoy the double tax benefits arising from the improvement of the cost reduction standard and the adjustment of the tax structure, so that the high income earners will appropriately increase their tax burden."

According to the adjusted tax rate, taxpayers who earn less than 19000 yuan per month will enjoy preferential tax reduction. Among them, the taxpayers with a monthly income of 7500 yuan to 10 thousand yuan will have the most burden reduction, reaching 350 yuan. This part of the income group accounts for the overwhelming majority of the personal income tax payment population. That is to say, the vast majority of wage earners can enjoy the double benefits arising from the increase of tax threshold and the structural adjustment of tax rates.

Moreover, the proposed beneficiaries of this tax adjustment bill also include individual industrial and commercial households, that is, when the 5 level tax rates remain unchanged, the first level of the tax rate for the production and business income of individual industrial and commercial households and the income from contracted lease operations (hereinafter referred to as production and business income) is adjusted to 5000 yuan from the annual taxable income of 15000 yuan, and the corresponding distances of other files have also been adjusted accordingly. The average annual tax payable is less than 60000 yuan, the tax burden of taxpayers is about 40%, the biggest decrease is 57%.

　　 Individual tax enters dynamic adjustment period

Judging from the adjustment of the tax threshold in recent years, the frequency and intensity of adjustment have been increasing. Some experts told reporters that from the overall planning of China in 12th Five-Year, one of the important contents is to readjust the distribution structure. Under such a background, China's tax adjustment has entered a period of dynamic adjustment.

Since the implementation of the current personal income tax law, the strength of the first two adjustments to the standard of reducing the cost of wages has been increased from 800 yuan / month to 1600 yuan / month in the past 6 years. Second times, from January 1, 2006 to March 1, 2008, from 1600 yuan / month to 2000 yuan / month, the adjustment took only 3 years, that is, the 1000 yuan increase.

With the increase of tax burden on low-income people, the voice of tax adjustment will be higher and higher. Recently, Yang Zhiming, deputy director of the Ministry of human resources and social security, pointed out: "we should strive to make the annual wage increase of 15%, so that we can still double the wage growth of workers during the '12th Five-Year' period. Obviously, the meaning of wage increase may not be simply an increase in the total amount of wages, which may include "raising the threshold of personal income tax, raising social wages in a larger scale, establishing a subsidy mechanism for low-income groups, and improving the standard of housing subsidy". This also means that a doubling of wage growth may require a dynamic personal tax adjustment.
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　 　 International competition for talents Trade-off factors

In addition to considering the adjustment mechanism of income distribution, a tax system needs to weigh various factors. The reporter understands that the adjustment of individual tax based on national strategy also reflects the attraction of talents in a sense.

In recent years, with the rapid growth of China's economy, a large number of so-called "rich" classes have been born. According to the wealth report published by Citigroup Private Bank in 2010, there are 340 thousand people in China who have reached the "standard" of wealth in 2009 (the standard is a person who has 1 million dollars to invest in assets, also known as high net assets).

At the same time, due to the existence of some injustice, the society has generated more or less hatred of the rich, hoping to increase the tax burden on these people, and to quote some foreign tax burden of over 50% of the high income class as an example.

However, a phenomenon that can not be ignored is that the developed countries have launched various tax exemption measures in order to compete for high-end talents. According to the reporter's understanding, the current draft of personal tax adjustment takes into account the background of globalization. While increasing the regulation of high-income earners, taking into account the international talent attraction and competition, this is the result of multiple trade-offs.

　　 data

Previous individual tax adjustments and fiscal reduction

2006

The starting point is adjusted from 800 yuan to 1600 yuan.

The financial revenue is reduced by 28 billion yuan.

2008

The starting point is adjusted from 1600 yuan to 2000 yuan.

Fiscal reduction by 30 billion yuan

2011

The starting point is adjusted from 2000 yuan to 3000 yuan.

Fiscal reduction by 120 billion yuan