Core Viewpoint - The core logic of individual income tax reform is to seek a better balance between fiscal revenue function and redistribution adjustment function, aiming to enhance the substantive regulatory role of individual income tax on income distribution through expanding the tax base, balancing the tax burden, and improving the deduction system, while supporting national economic development and major social goals [1][3][20] Tax Reform Necessity - The current individual income tax system framework was established in 2018, with significant changes including the merging of various income types for tax calculation and the introduction of special additional deductions for education, medical expenses, and childcare [5] - The individual income tax revenue is projected to grow from 1.3872 trillion yuan in 2018 to 1.6187 trillion yuan by 2025, with its share in total tax revenue increasing from 8.86% to 9.18% [5] Reform Goals - The reform aims to enhance the redistributive effect of individual income tax through a progressive tax rate structure, with the highest marginal tax rate at 45% for comprehensive income and 35% for business income, thereby regulating wealth distribution [10][12] - The focus is on expanding the middle-income group, providing tax exemptions for certain populations, and limiting high incomes to reduce income disparity [11][12] Challenges in Limiting High Incomes - The most challenging aspect of income distribution adjustment is effectively regulating high incomes, with a need for stricter oversight and regulation of high-income individuals and their diverse income sources [14][15] - High-income individuals often utilize various channels for income, complicating tax management and leading to significant tax evasion [15][16] Future Trends in Tax Reform - The individual income tax reform is expected to follow five major trends: expanding the scope of comprehensive income taxation, improving capital income tax policies, optimizing the deduction system, enhancing data-driven tax management, and potentially introducing supplementary taxes like exit taxes and inheritance taxes [20] - The short-term focus is on ensuring basic living needs through differentiated deduction mechanisms, while the mid-term goal emphasizes income distribution adjustment and fiscal revenue generation [20]