Factor decomposition of changes in the income tax base

Taro Ohno (), Junpei Sakamaki, Daizo Kojima and Tomotsugu Imahori
Additional contact information
Taro Ohno: Policy Research Institute, Ministry of Finance
Junpei Sakamaki: Policy Research Institute, Ministry of Finance
Daizo Kojima: Policy Research Institute, Ministry of Finance
Tomotsugu Imahori: Policy Research Institute, Ministry of Finance

The Japanese Economic Review, 2024, vol. 75, issue 1, No 1, 28 pages

Abstract: Abstract Following generous tax deductions, Japan’s income tax base is facing shrinkage; however, this trend has evolved not only due to changes to the tax system, but also due to changes in income distribution and population composition. In this study, we use household micro data from the National Survey of Family Income and Expenditure (NSFIE, 1994–2014) to explicate the state of deductions and trends in household distribution over a 20-year period while considering the contribution of each factor to changes in the tax base through decomposition. Using a microsimulation analysis, we also assess the effects of recent changes to the tax system on the tax base. Based on a long-term perspective, while the tax base has primarily been eroded due to the effects of falling incomes and an aging population, the contributions of tax system changes responding to such pressures have been limited. Including both expansion and contraction periods in the deduction system also has an effect. From a short-term perspective, changes in the tax system have had a certain impact, particularly in the 2000s, when the tax base was expanded by reducing deductions. However, this effect has eventually been offset by changes in income distribution and population composition.

Keywords: Income tax; Tax deduction; Tax base; Japan (search for similar items in EconPapers)
JEL-codes: C15 H24 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s42973-023-00125-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecrev:v:75:y:2024:i:1:d:10.1007_s42973-023-00125-6

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/42973

DOI: 10.1007/s42973-023-00125-6

Access Statistics for this article

The Japanese Economic Review is currently edited by Michihiro Kandori

More articles in The Japanese Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().