The Noncompliance of Individual Income Tax for China’s High-income Individuals:
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| Title | The Noncompliance of Individual Income Tax for China’s High-income Individuals:
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| Author | Wang Chong and Li Linmu |
| Organization | Nanjing University of Economics and Finance |
| Email | wangchong.wch@gmail.com,llm0010@163.com |
| Key Words | High-income Individuals; Individual Income Tax; Tax Compliance; Tax Tolerance; The Recursive CMP Model |
| Abstract | To measure the degree of tax non-compliance with economic significance, this paper designs an econometric framework which based on the recursive CMP (conditional mixed-process) model and the provincial aggregated data about the self declaration of individual income tax for individuals with annual income over 120,000 RMB yuan in China over the period from 2008 to 2010. The empirical results show that the taxable income of self declaration of high-income individual accounted for the actual taxable income was only 29.12%, which means that the degree of non-compliance was up to 70.88%. In order to raise the individual income tax compliance of high-income earners, and to avoid the loss of economic performance, the taxpayer compliance decision-making with coordination of the collection and management of taxes and non-tax institutional environment must be designed integratedly. As a guiding idea, the tax tolerance of high-income individuals must be enhanced, so as to achieve a benign state of which tax compliance and tax tolerance improve synchronously, and incentive and regulatory instruments coexist for high-income individuals. |
| Serial Number | WP413 |
| Time | 2013-02-21 |
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