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Should Japanese Tax System Be More Progressive?

Shun-ichiro Bessho and Masayoshi Hayashi

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

Abstract: We investigate the effects of marginal changes of marginal tax rates of Japanese income tax system, computing the social marginal costs of public funds (SMCF) generated by marginal increase in tax rates. We use large micro data sets on Japanese households, and estimate a structural discrete choice model of household labor supply. Our estimation results show that the average of total elasticity of males ranges between 0.0276 and 0.0521, and that of female between 0.0429 and 0.2134. Based on the estimated utility functions, we find that SMCF for raising the marginal tax rate applied for those with low- or medium-income level is smaller than those with more income. Our results could suggest Japanese income tax system should be less progressive.

Keywords: Social marginal cost of public funds; structural discrete choice model; household labor supply (search for similar items in EconPapers)
JEL-codes: H21 H24 H31 J22 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-acc, nep-dcm, nep-pbe and nep-pub
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http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd10-181.pdf (application/pdf)

Related works:
Journal Article: Should the Japanese tax system be more progressive? An evaluation using the simulated SMCFs based on the discrete choice model of labor supply (2015) Downloads
Working Paper: Should the Japanese Tax System Be More Progressive? An Evaluation Using Simulated SMCFs Based on the Discrete Choice Model of Labor Supply (2012) Downloads
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