Date of Award


Document Type


Degree Name

Doctor of Juridical Science (SJD)


This dissertation provides a review of tax theories, laws, and policies of the U.S. and China on taxing capital gains. Based on the review, I draw a comparative analysis of the two countries’ laws and policies and prescribe legislative options for taxing capital gains under the individual income tax law in China.

The dissertation contributes to both the Chinese literature and the U.S. literature: For China, this research takes upon an overlooked yet increasingly important issue in China’s individual income tax—the taxation of capital gains. Though the 2018 Individual Income Tax Law brought significant changes to the classification of individual income and the calculation of taxable income, the rules regarding capital gains remain largely unchanged. Questions and concerns regarding how to further promote distributive justice, as well as how to equitably tax capital gains arise, yet little academic work in China has been devoted to these questions. On the other hand, in the U.S., there exists a large volume of literature discussing the implications of a capital gains tax policy change. This dissertation seeks to bring together the issues faced by Chinese legislators with the U.S. literature and experiences on the issue and prescribes short-term and long-term reform options for China.

This dissertation also contributes to the U.S. literature by reviewing the four tax reforms since the Reform and Opening Up in China, including China’s transition from efficiency-centered policymaking to balancing economic development with social equity. The paper also outlines the legislative route in China, introducing to U.S. readers the sources of authorities in Chinese tax law research, and providing updates on the most recent 2018 individual income tax reform.

This dissertation is structured as follows: Chapter One reviews the tax law objectives, equity, efficiency, and simplicity, to lay out the theoretical framework in which this dissertation operates. Questions explored in this Chapter include the evolution of the principle of ability to pay, the dynamics in the rank of tax equity among other competing values such as economic efficiency in China, the tension between empirical studies and economic theories, and the trade-offs among the three objectives. Chapter Two provides an overview of China’s tax system, the sources of laws, with a focus on the individual income tax law of China, and the provisions regarding taxing capital gains. Chapter Three examines the arguments in prior American literature about the capital gains tax preference and the considerations for the holding period requirement and loss limitation rules. Chapter Four proposes short-term and long-term reform options for China and provides an update on the recent valuation literature and proposals outside of the individual income tax realm to address the inequities brought by the realization system.

Available for download on Friday, May 26, 2023

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