Economic studies of taxation in Japan: The case of personal income taxes

We argue that tax policy in Japan is on a shaky empirical ground. First, until recently, no serious attempts had been made to estimate labour responses to taxation, especially with respect to prime-age male workers. Second, while there is some stock of empirical analysis on labour supply response of...

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Bibliographic Details
Published in:Journal of Asian economics 2005-12, Vol.16 (6), p.956-972
Main Authors: Bessho, Shun-ichiro, Hayashi, Masayoshi
Format: Article
Language:English
Subjects:
Distortion
Fiscal policy
Income taxes
Labor economics
Labor supply
Marginal cost of public funds
Personal income taxes
Studies
Taxation
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Summary:We argue that tax policy in Japan is on a shaky empirical ground. First, until recently, no serious attempts had been made to estimate labour responses to taxation, especially with respect to prime-age male workers. Second, while there is some stock of empirical analysis on labour supply response of female workers, few studies have appropriately allowed for the budget constraint structure implied by the tax system. Third, as a corollary, there is not a reliable stock of empirical estimates to quantify the frequently employed concepts of “disincentives to work” or “distortion.” Given this state of the literature, we introduce our estimates, and calculate the degree of distortion using the concept of the marginal cost of public funds.
ISSN:1049-0078
1873-7927
DOI:10.1016/j.asieco.2005.10.008