Distributional Effects of Tax Reforms in Japan: Micro-simulation Approach
IMF Working Papers, July 22, 2022
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Bibliographic details
- Authors: Takuma Hisanaga
- Published: July 22, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400214097.001
Overview and objective
- Author: Takuma Hisanaga
- Date: July 22, 2022
- Scope: Micro-simulations to study the distributional effects of several tax measures in Japan, accounting for households’ heterogeneity in terms of both income and wealth.
- Publication: IMF Working Papers, Working Paper No. 2022/150, Issue: 150, Volume: 2022, Pages: 35, DOI: https://doi.org/10.5089/9798400214097.001
Key findings (simulation results)
- Increasing the consumption tax rate and strengthening the recurrent tax on immovable property would weigh more heavily on low-income households with large wealth than on those of comparable incomes with small wealth.
- Introduction of a consumption tax credit would be effective in containing a rise in tax burden of low-income households.
Policy implications and recommendations
- Consider pairing consumption tax rate increases with targeted measures (for example, a consumption tax credit) to protect low-income households.
- Account for household heterogeneity in both income and wealth when designing tax reforms, as similar-income households can face different burdens depending on wealth holdings.
- Strengthening recurrent property taxation needs careful assessment of distributional impacts, particularly on low-income but asset-rich households.
Subjects and analytical focus
- Subjects: Consumption taxes, Income, National accounts, Personal income tax, Tax allowances, Tax incidence, Tax policy, Taxes
- Keywords highlight focal elements of the analysis: capital income tax tax rate, consumption tax credit, Consumption taxes, employment income deduction, Income, income decile, Inequality, Japan, Micro-simulation, pension income deduction, Personal income tax, reform option, resident tax, Tax allowances, Tax incidence, Tax Policy
Takuma Hisanaga. "Distributional Effects of Tax Reforms in Japan: Micro-simulation Approach", IMF Working Papers 2022, 150 (2022), July 22, 2022, DOI: https://doi.org/10.5089/9798400214097.001.
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