Within-cohort Inequality and Tax Reforms in Aging Japan
نویسنده
چکیده
September 2002 Abstract This paper, in a quantitative way, studies the macroeconomic and welfare effects of introducing a progressive expenditure tax in a situation with the aging of the Japanese population. The paper simulates capital accumulation and social welfare by taking account of the general equilibrium effects of intragenerational inequality in order to predict the future aged society. The simulation results suggest that progressive expenditure-based taxation has advantages over progressive labor income-based taxation on grounds of both efficiency and equity. Therefore, the paper proposes a shift to a progressive expenditure tax in order to overcome the large welfare loss that would occur under Japanese current tax system.
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