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Title: |
Optimal Tax Combination in an Aging Japan |
| Author: |
Okamoto, Akira |
| Author
Affiliation: |
Okayama University, Japan |
| Source: |
International Economic Journal, March 2007, v. 21, no. 6, pp. 91-114 |
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Publication Date: |
March 2007 |
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Abstract: |
This paper quests for a desirable tax policy in the coming aging society. Because the current Japanese public pension program is operated in a manner that is almost similar to a pay-as-you-go scheme, the declining percentage of the working population will have a harmful effect on economic welfare. Our simulation results show quantitatively that a progressive expenditure tax is ultimately desirable, and that an inheritance tax stimulates capital accumulation after an expenditure tax. This paper suggests that the Japanese tax system should rely more on an inheritance tax, and that when we consider a tax-mix policy, the combination of a progressive expenditure tax and an inheritance tax can be preferable.
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