The Constitutional Issue of the Deduction for Costs of Income from Wages
Date Issued
2014
Date
2014
Author(s)
Kuan, Yu-Chieh
Abstract
According to article §13 of Income Tax Act in Taiwan, consolidated income tax of an individual shall be levied on the amount of his net consolidated income which shall be the gross consolidated income minus the amount of tax-exempt income, and various deductions. This article demonstrates that net income is the most essential foundation of calculating the amount of taxable income in personal income tax.
Among the ten types of income which are set in Article §14I of Income Tax Act, costs and expenses of “income from professional practice” could be deducted to calculate the actual amount of income. However, without specific provision in the same article, costs and expenses could not be deducted when calculating the real amount of “income from salaries/wages”. According to article §17I 2(3) of Income Tax Act, taxpayers who have income from salaries/wages can only deduct their costs and expenses directly related to work by the system of “special deduction of income from salaries/wages”, while NT$100,000 is the limitation per year.
As a result of the different legal treatments of these two types of income in Income Tax Act, civil servants in the administrative organ and judges in administrative courts hold the view that costs and expenses shall not be included while using the term “income from salaries/wages”. However, this kind of opinion cannot be justified. According to the principle that personal income tax shall be levied on the actual amount of net income, it is obviously clear that costs and expenses shall be included while calculating deductions.
Due to the reason that both income from professional practice and income from salaries/wages include costs and expenses, the different legal treatment between these two types of income is unequal. Although income from salaries/wages is not considered as an income from independent work, while levying income tax, it reveals the same character as what income from salaries/wages does. To be more specific, both of these two types of income are undoubtedly being sorts of “compensation for services”. Since they have the same character, income from salaries/wages and income from professional practice must be treated equally while deducting costs and expenses.
In addition, this kind of unequal legal treatment is an important issue not only in legislative omission but also in the constitutional law, which is relevant to basic principles of tax law (such as ability-to-pay principle, the objective net principle, and the principle of "substance-over-form") and taxpayers’ rights (such as right to equality and right to work. This thesis discuss the essential relationship between costs and expenses and income from salaries/wages from these dimensions with the view of comparative law and then put forward the author’s own opinions and suggestions in the last chapter.
Subjects
薪資所得
執行業務所得
薪資所得特別扣除額
量能課稅平等原則
實質課稅原則
平等權
工作權
Type
thesis
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