Simulating fundamental tax reforms in an aging Japan

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4 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)163-185
Number of pages23
JournalEconomic Systems Research
Volume17
Issue number2
DOIs
Publication statusPublished - Jun 1 2005

Keywords

  • Aging population
  • Life-cycle general equilibrium model
  • Simulation
  • Tax reform

ASJC Scopus subject areas

  • Economics and Econometrics

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