A nation without a corporate income tax: Evidence from nineteenth century Japan

Kazuki Onji () and John Tang
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Kazuki Onji: Graduate School of Economics, Osaka University

No 15-12, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This study provides evidence on tax distortion to organizational choices of firm using historical data. We utilize the 1887 introduction of a personal income tax (PIT) in Japan as a quasi-experiment to examine tax-motivated incorporation. We circumvent the data limitation in the 19 th century by drawing on a firm-level dataset constructed from genealogies of Japanese corporations. The sample is 3,203 firm- year observations spanning 1880-1892. We find that the introduction of PIT affected the adoption of simpler types of corporations and increased the corporate share of establishments by about 3 percentage points. The evidence indicates the role of a corporate income tax as a backstop to maintain revenue performance of PIT.

Keywords: Tax Avoidance; Organizational Form; Business Incorporation (search for similar items in EconPapers)
JEL-codes: G34 H25 K34 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015-05
New Economics Papers: this item is included in nep-his and nep-law
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Citations: View citations in EconPapers (3)

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http://www2.econ.osaka-u.ac.jp/library/global/dp/1512.pdf (application/pdf)

Related works:
Journal Article: Taxes and the Choice of Organizational Form in Late Nineteenth Century Japan (2017)
Working Paper: A nation without a corporate income tax: Evidence from nineteenth century Japan (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1512

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