A nation without a corporate income tax: Evidence from nineteenth century Japan

Kazuki Onji and John Tang

No 40, CEH Discussion Papers from Centre for Economic History, Research School of Economics, Australian National University

Abstract: This study provides evidence on tax distortion to organizational choices of firm using historical data. We utilize the 1887 introduction of a personal income tax (PIT) in Japan as a quasi-experiment to examine tax-motivated incorporation. We circumvent the data limitation in the 19th century by drawing on a firm-level dataset constructed from genealogies of Japanese corporations. The sample is 3,203 firm-year observations spanning 1880-1892. We find that the introduction of PIT affected the adoption of simpler types of corporations and increased the corporate share of establishments by about 3 percentage points. The evidence indicates the role of a corporate income tax as a backstop to maintain revenue performance of PIT.

Keywords: Tax Avoidance; Organizational Form; Business Incorporation (search for similar items in EconPapers)
JEL-codes: G34 H25 K34 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-acc, nep-his, nep-law and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://cbe.anu.edu.au/researchpapers/CEH/WP201510.pdf

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Working Paper: A nation without a corporate income tax: Evidence from nineteenth century Japan (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:auu:hpaper:040

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