An Economic Analysis on Pension Financing Methods: Is VAT Better than Wage Proportional Tax?

Junichiro Takahata

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: Recently, Japanese public pension scheme has been discussed more often, especially about how to finance the scheme. It is possible to finance the scheme by wage-proportional contribution or by Value-Added-Tax, but the allocation may be different depending on the financial method. I find that an optimal tax rate is 0 percent at steady state under either method by using a dynamic general equilibrium model with individuals living at longest 80-period in an incomplete market setting. Moreover, I show that it is better to have the scheme with Value-Added-Tax when we have a certain amount of public pension scheme.

Keywords: ”N‹à; A; Á”ï; Å•ûŽ®; Aˆê”Ê‹Ï; t (search for similar items in EconPapers)
JEL-codes: E21 E62 H21 H24 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-acc
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Persistent link: https://EconPapers.repec.org/RePEc:hst:ghsdps:gd08-043

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