A Revised Estimation of Japan's Income Tax Base

Shigeki Morinobu and Atsushi Nakamoto
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Shigeki Morinobu: Professor at the Faculty of Law, Chuo University
Atsushi Nakamoto: Visiting Researcher, Policy Research Institute, Ministry of Finance

Public Policy Review, 2013, vol. 9, issue 2, 433-455

Abstract: Here we conduct a macroeconomic estimation of the trends regarding the income tax base by making use of the 93SNA while overcoming some of the problems detected in estimations in preceding research. If we take a look at the post-1997 trend, Morinobu and Maekawa (2001), although the tax base increased around the middle of the 2000s following the income deduction reforms, it basically showed a declining tendency after that period due to the increase in social security costs associated with the aging of the population. The widening of the tax base will be one of our big policy challenges in future tax system reforms in order to enhance the function of redistribution of income tax. In particular, we should facilitate the shift from income deduction to tax deduction with or without benefits, which is a main trend in tax reforms in other advanced countries, and should revise the spousal deduction system that lacks neutrality regarding, and is in disfavor of, women advancing in society, and also should revise the deductions for public pensions as well as for the medical expenses.

Keywords: income taxation; income deduction; tax base; tax reforms; spousal deduction; deduction for public pensions and other incomes; tax credit; refundable tax credit (search for similar items in EconPapers)
JEL-codes: E62 H24 (search for similar items in EconPapers)
Date: 2013
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