Core Viewpoint - The article emphasizes the increasing importance of individual income tax (IIT) reform in China, particularly in the context of promoting common prosperity and stimulating economic growth through enhanced consumer spending [3][4][5]. Summary by Sections Tax System and Reform Proposals - The Chinese government has been urged to reform the individual income tax system, including raising the tax threshold and optimizing tax rates, to better reflect the economic realities and address income disparities [2][5]. - The current tax system has a maximum marginal tax rate of 45% for labor income, while capital gains are generally taxed at a lower rate of 20%, indicating a disparity in tax treatment [4][9]. Economic and Social Implications - The reform of individual income tax is seen as crucial for reducing the tax burden on middle and low-income groups, thereby increasing disposable income and stimulating consumption [3][5]. - The article highlights that the adjustment of the tax threshold has not kept pace with rising living costs, particularly in major cities, leading to ongoing calls for reform [5][12]. Tax Administration Challenges - The complexity of high-net-worth individuals' asset configurations poses challenges for tax administration, as their income sources are diverse and often difficult to monitor [4][9]. - The current tax system is criticized for being overly reliant on labor income, which may not adequately address the growing diversity of income sources in the modern economy [13][19]. Future Directions for Tax Reform - Future reforms should focus on expanding the scope of taxable income, optimizing tax rate structures, and implementing a dynamic adjustment mechanism linked to consumer price indices and median wages [17][18]. - The article suggests exploring family-based tax reporting to better reflect the economic burdens of households, which could enhance horizontal equity in the tax system [17][18]. Conclusion - The ultimate goal of individual income tax reform is to create a more progressive, precise, and equitable tax system that effectively addresses income distribution and promotes social justice [18][19].

Core Viewpoint - The ongoing discussions around personal income tax (PIT) reform in China highlight the need for adjustments to the tax system to better align with economic realities and social equity goals, particularly in the context of promoting common prosperity and stimulating domestic consumption [2][3][4]. Group 1: Importance of PIT Reform - PIT reform is increasingly seen as essential for addressing income distribution and enhancing economic growth, especially in light of rising living costs and inflation [2][3]. - The current tax burden on the working class is perceived as high, necessitating a review of the tax threshold to stimulate consumption and increase disposable income for middle and low-income groups [2][3][4]. Group 2: Structural Issues in Current Tax System - The existing tax system shows a significant imbalance between labor income and capital income taxation, with labor income facing a maximum marginal tax rate of 45% compared to a flat 20% for capital gains [10][14]. - The complexity of high-net-worth individuals' asset configurations poses challenges for effective tax administration, as their income sources are diverse and often cross-border [10][14]. Group 3: Social Equity and Taxation - The calls for PIT reform reflect deeper societal demands for economic fairness and modernization of the tax system, emphasizing the need for a more equitable distribution of tax burdens [3][4][9]. - The current fixed deduction standards do not adequately account for regional differences and inflation effects, leading to persistent calls for adjustments [3][4]. Group 4: Future Directions for PIT Reform - Future reforms should focus on expanding the scope of comprehensive income, optimizing tax rate structures, and implementing dynamic adjustments linked to consumer price indices and median wages [20][21]. - The introduction of a family-based tax filing system could enhance horizontal equity by better reflecting the actual financial burdens faced by households [20][21]. Group 5: Challenges and Opportunities - The current PIT system's reliance on a "salary tax" model does not adequately address the diverse income sources and employment forms in the modern economy, necessitating a shift towards a more inclusive tax framework [14][15]. - The establishment of a dynamic adjustment mechanism for tax thresholds linked to economic indicators could enhance fairness and efficiency in the tax system [17][18].