Tax capacity is an important perspective for tax system research，and the precondition of tax reform is based on the scientific judgment about tax capacityUnder given conditions，tax system determines the level of tax capacity，while tax capacity in turn affects the progress of tax reformChinas recent economic and social developments have changed the tax capacity and the structure of each economic subjects within the operation of economyFrom the perspective of tax capacity，in terms of taxation structure，policies and administration system，the existing tax system has become inadaptable to the requirements of economic and social developmentThus，based on scientific judgment on the existing and future tax capacity，Chinas tax reform needs to come up with an explicit orientation and approaches for tax system optimization，accelerate the construction of local taxation system and further improve the tax administration system