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Simulating fundamental tax reforms in an aging Japan

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  • Akira Okamoto

Abstract

This paper studies in a quantitative way the macroeconomic and welfare effects of introducing progressive expenditure taxation, in a situation of the aging of the Japanese population. It undertakes a simulation analysis taking account of the general equilibrium effects of intragenerational inequality, which increases with a transition to an aging society. The simulation results suggest that progressive expenditure taxation has advantages over progressive labor income taxation on the grounds of efficiency and equity. Thus, a shift to progressive expenditure taxation can overcome the large welfare loss that would occur under the current tax system as Japan ages.

Suggested Citation

  • Akira Okamoto, 2005. "Simulating fundamental tax reforms in an aging Japan," Economic Systems Research, Taylor & Francis Journals, vol. 17(2), pages 163-185.
    • Handle: RePEc:taf:ecsysr:v:17:y:2005:i:2:p:163-185
    DOI: 10.1080/09535310500114911
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    References listed on IDEAS

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    1. Seidman, Laurence S, 1983. "Taxes in a Life Cycle Growth Model with Bequests and Inheritances," American Economic Review, American Economic Association, vol. 73(3), pages 437-441, June.
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    4. Okamoto, Akira, 2005. "Simulating progressive expenditure taxation in an aging Japan," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 309-325, April.
    5. Kato, Ryuta, 1998. "Transition to an Aging Japan: Public Pension, Savings, and Capital Taxation," Journal of the Japanese and International Economies, Elsevier, vol. 12(3), pages 204-231, September.
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    9. Fumio Ohtake & Makoto Saito, 1998. "Population Aging And Consumption Inequality In Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(3), pages 361-381, September.
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    11. Laurence S. Seidman, 1997. "A Progressive Consumption Tax," Challenge, Taylor & Francis Journals, vol. 40(6), pages 63-84, November.
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    Cited by:

    1. Akira Okamoto, 2013. "Welfare Analysis of Pension Reforms in an Ageing Japan," The Japanese Economic Review, Japanese Economic Association, vol. 64(4), pages 452-483, December.
    2. Akira Okamoto, 2013. "Simulating Public Pension Reforms in an Aging Japan: Welfare Analysis with LSRA Transfers," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 597-632, September.
    3. OKAMOTO Akira, 2006. "An Optimal Rate of the National Burden in an Aging Japan," Discussion papers 06036, Research Institute of Economy, Trade and Industry (RIETI).

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