THE IMPACT OF BALANCING DOMESTIC AND FOREIGN TAX SYSTEMS ON ALLEVIATING TAXPAYERS' INEQUALITY AND ANXIETY

Abstract

Abstract Background The economy of China has gotten impressive change in recent years, to which personal income got many times higher than before correspond. Global economy also had a great impact to China. There are more foreigner applied China’s Visa and work or live in China. How could their personal income income be levied, same or different with Chinese? Same or different with previous income tax policy? Personal income tax is the most concern of all natural taxpayers, which is directly related to the amount of personal net income, which impacted the living cost plan. Under the current situation that China strengthens the introduction of returnees who have gotten great achievement in certain business and research field and the tax administration of personnel outside the enterprise, there are now a large number of domestic and overseas taxpayers in group of the natural taxpayers. However, from 1998 to now, due to the personnel income huge gap between domestic and foreigner who were invited to work in China, there have been policy differences between domestic and foreign personnel in China's personal income tax payroll and salary foreign-related tax policies, which has resulted in the psychological inequity of taxpayers and caused the psychological inequity and social anxiety of domestic personnel. Subjects and Methods In this paper, the official tax data is selected, and the case of Appendix 4 in S.D.S.H. [2014] No. 65 document is taken as an example to use specific income data to generate different tax burden differences and impacts on the differences between domestic and foreign taxpayers under the same income, shows the unfair consequence according the present personal income tax policy. Results From these tax differences, it is found that there are still some problems in China's tax policy corresponding to personal income tax wages and salaries, such as tax unfairness caused by repeated deductions, additional deductions and tax exemption items for foreigners, which negatively affect the efficiency of talent policy, etc., and the psychological unfairness and social anxiety to domestic taxpayers are discussed. Conclusions Finally, the policy suggestions to improve the tax policy and link taxpayers' psychological injustice and social anxiety are put forward: According to the new talent policy which induced the high-level experts despite of their nationalities and the change of economic environment in which China’s GDP have been almost the advanced country group and individual income went up higher, China should make the fair tax policy, avoid repeated deductions, cancel additional deductions and tax exemption items for foreigners, and improve the corresponding tax system from the perspectives of improving tax fairness and efficiency, maintaining tax neutrality and simplifying the tax system. The range of data income levels selected in this paper is not comprehensive enough, and there is no specific research on ultra-high income groups.