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THE ROLE OF INDIVIDUAL INCOME TAX IN THE GOVERNMENT SOCIAL POLICY FORMATION

S. N. Belousova, L. V. Sevrukova, T. Yu. Tkacheva, L.V. Afanasjeva, L. N. Hardikova

Abstract

The paper studies foreign practices of tax policy formation. The capability of a state to ensure social stability based on reasonable distribution of national wealth and household income is a very important indicator of modern society development level. However the mechanism of income distribution and the results of its operation may not agree with the social idea of justice. Many economists adhere to the opinion that the state should regulate the distribution of the incomes of the society and it is advisable to organize this process by applying direct taxes (while indirect taxes should mainly fulfill fiscal function). A very special place in this process is taken by individual income tax. It is proved that a stage-by-stage reform of individual income taxation with gradual transition to progressive tax, introduction of personal exemption system, a change in the social focus and amount of tax credits, as well as a better quality of tax control can help to balance the interests of the state and different social groups in the distribution of the national income and to even-out social inequality. It is shown that the role of individual income tax as a state social policy instrument is to distribute the national income among different social groups so that it favors social stability and supports citizens in exercising their constitutional rights.

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