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The Role of Personal Income Tax to Mitigate Widening Income Inequality: the Case of Japan

Author

Listed:
  • Ejii Tajika

    (Hitotsubashi University)

  • Hiroyuki Yashio

    (Kyoto Sangyo University)

Abstract

The Japanese personal income tax system has been designed to mitigate the tax burden by granting generous deductions and by employing a steep marginal tax curve. The failure of it is that the combined burden of tax and social-security contributions of low-income people has not been dealt with. The purposes of this article are twofold: first, to show that the social-security burden is in fact higher than the tax liability for most of the working population, and second, to show that it is possible to mitigate the burden by introducing refundable tax credits. Results of micro-simulation using a survey of household income are presented to show the combined tax and socialsecurity burden of families of various income classes.

Suggested Citation

  • Ejii Tajika & Hiroyuki Yashio, 2007. "The Role of Personal Income Tax to Mitigate Widening Income Inequality: the Case of Japan," Journal of Income Distribution, Ad libros publications inc., vol. 16(3-4), pages 55-70, September.
    • Handle: RePEc:jid:journl:y:2007:v:16:i:3-4:p:55-70
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/7230
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    Citations

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    Cited by:

    1. Hiroyuki Yashio & Keishi Hachisuka, 2014. "Impact of Population Aging on the Personal Income Tax Base in Japan : Simulation Analysis of Taxation on Pension Benefits Using Micro Data," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 10(3), pages 519-542, October.
    2. Elena S. Vylkova, 2021. "Personal income tax: Reforms in Russia and their impact on the income inequality," Journal of New Economy, Ural State University of Economics, vol. 22(2), pages 5-22, July.
    3. Heller, Peter S., 2016. "The challenge of an aged and shrinking population: Lessons to be drawn from Japan’s experience," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 85-93.

    More about this item

    Keywords

    personal-income tax; deductions; credits; social security; globalization;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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