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Optimal Tax Combination in an Aging Japan

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  • Akira Okamoto

Abstract

This paper searches for a desirable tax combination in the coming aging society. It looks at the Japanese tax and social security systems through an extended life-cycle general equilibrium simulation model and evaluates the macroeconomic and welfare effects of alternative tax policies in an aging Japan. Simulation results show that an increase in the rate of tax on consumption and a decrease in the rate of tax on interest income may be a desirable tax combination under conditions of revenue neutrality, because the combination substantially promotes capital formation and brings with it a significant improvement in social welfare.

Suggested Citation

  • Akira Okamoto, 2007. "Optimal Tax Combination in an Aging Japan," International Economic Journal, Taylor & Francis Journals, vol. 21(1), pages 91-114.
    • Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:91-114
    DOI: 10.1080/10168730601180978
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    References listed on IDEAS

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    1. Toshihiro Ihori & Ryuta Ray Kato & Masumi Kawade & Shun-ichiro Bessho, 2005. "Public Debt and Economic Growth in an Aging Japan," CARF F-Series CARF-F-046, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
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    Cited by:

    1. Akira Okamoto, 2013. "Simulating Public Pension Reforms in an Aging Japan: Welfare Analysis with LSRA Transfers," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 597-632, September.

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