 The Political Economy of Social Security Funding: Why Social VAT Reform?Hideki Konishi ()
Chapter Chapter 2 in The Political Economy of Fiscal Consolidation in Japan, 2015, pp 35-66 from Springer Abstract: Abstract Recently, taxation reforms entailing a “social” valued-added tax (VAT), i.e., a social security reform shifting funding from traditional wage-based taxation to consumption taxation, have been obtaining political support in some developed countries, e.g., Japan, France, Denmark, and Germany. This paper analyzes the political economy of social security funding in an overlapping-generations economy. In particular, we consider how population aging influences the choice of wage or consumption tax financing by focusing on their differential impact on inter- and intragenerational redistribution. Our results show that population aging may drastically alter the political equilibrium: if the population growth rate is higher than the interest rate, wage taxation is the only equilibrium choice, but if it is lower, multiple equilibria are likely to emerge, in which the introduction of consumption taxation emerges as an alternative equilibrium choice. Keywords: Consumption tax; Political economy of social security; Structure-induced equilibrium (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:advchp:978-4-431-55127-0_2 Ordering information: This item can be ordered from DOI: 10.1007/978-4-431-55127-0_2 Access Statistics for this chapter More chapters in Advances in Japanese Business and Economics from Springer |
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