TY - JOUR
T1 - Optimal tax combination in an aging Japan
AU - Okamoto, Akira
PY - 2007/3
Y1 - 2007/3
N2 - This paper searches for a desirable tax combination in the coming aging society. It looks at the Japanese tax and social security systems through an extended life-cycle general equilibrium simulation model and evaluates the macroeconomic and welfare effects of alternative tax policies in an aging Japan. Simulation results show that an increase in the rate of tax on consumption and a decrease in the rate of tax on interest income may be a desirable tax combination under conditions of revenue neutrality, because the combination substantially promotes capital formation and brings with it a significant improvement in social welfare.
AB - This paper searches for a desirable tax combination in the coming aging society. It looks at the Japanese tax and social security systems through an extended life-cycle general equilibrium simulation model and evaluates the macroeconomic and welfare effects of alternative tax policies in an aging Japan. Simulation results show that an increase in the rate of tax on consumption and a decrease in the rate of tax on interest income may be a desirable tax combination under conditions of revenue neutrality, because the combination substantially promotes capital formation and brings with it a significant improvement in social welfare.
KW - Aging population
KW - Life-cycle general equilibrium model
KW - Simulation analysis
KW - Tax reform
UR - http://www.scopus.com/inward/record.url?scp=84929999576&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84929999576&partnerID=8YFLogxK
U2 - 10.1080/10168730601180978
DO - 10.1080/10168730601180978
M3 - Article
AN - SCOPUS:84929999576
SN - 1016-8737
VL - 21
SP - 91
EP - 114
JO - International Economic Journal
JF - International Economic Journal
IS - 1
ER -