Trends in taxation of personal income: Russian and foreign experience

Abstract

The authors provide a comparative analysis of theoretical and practical approaches to taxation of personal income in the Russian tax system and foreign tax systems. In our research we used a systems approach, methods of statistical, economic and comparative analysis in order to study taxation of individual income. Primarily, the increase of budgets revenues at the expense of income tax is possible by introducing higher tax rates with respect to individuals with high income. Most of the foreign countries with developed economies apply a progressive personal income tax rate scale, which fully corresponds to the principle of social justice, i.e. the rich pay more in absolute and relative terms. Based on the comparative analysis of theoretical and practical approaches to taxation of personal income in the Russian and foreign tax systems, the authors propose to improve personal income taxation in Russia. Income tax must not only fulfill a fiscal function, but also a social one.