Simulating fundamental tax reforms in an aging Japan

Akira Okamoto

Economic Systems Research, 2005, vol. 17, issue 2, 163-185

Abstract: This paper studies in a quantitative way the macroeconomic and welfare effects of introducing progressive expenditure taxation, in a situation of the aging of the Japanese population. It undertakes a simulation analysis taking account of the general equilibrium effects of intragenerational inequality, which increases with a transition to an aging society. The simulation results suggest that progressive expenditure taxation has advantages over progressive labor income taxation on the grounds of efficiency and equity. Thus, a shift to progressive expenditure taxation can overcome the large welfare loss that would occur under the current tax system as Japan ages.

Keywords: Aging population; tax reform; life-cycle general equilibrium model; simulation (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/09535310500114911

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