Laffer curves in Japan

Abstract In the earlier related literature, consumption tax rate Laffer curve is found to be strictly increasing (see Trabandt and Uhlig (2011)). In this paper, a general equilibrium macro model is augmented by introducing a substitute for private consumption in the form of home production. The introduction of home production brings about an additional margin of adjustment – an increase in consumption tax rate not only decreases labor supply and reduces the consumption tax base but also allows a substitution of market goods with home-produced goods. The main objective of this paper is to show that, after the introduction of home production, the consumption tax Laffer curve exhibits an inverse U-shape. Also the income tax Laffer curves are significantly altered. The result shown in this paper casts doubt on some of the earlier results in the literature.

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How Do Laffer Curves Differ across Countries?

Fiscal Policy after the Financial Crisis ◽

10.7208/chicago/9780226018584.003.0007 ◽

2014 ◽

pp. 211-249 ◽

Cited By ~ 3

Author(s):

Mathias Trabandt ◽

Harald Uhlig

Keyword(s):

Laffer Curves

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How do the Tax Burden and the Fiscal Space in Latin America look like? Evidence through Laffer Curves

Latin American Economic Review ◽

10.47872/laer.v30.77 ◽

2021 ◽

pp. 1-26

Author(s):

Ignacio Lozano-Espitia ◽

Fernando Arias-Rodríguez

Keyword(s):

Latin American ◽

Tax Rates ◽

National Accounts ◽

Effective Tax Rates ◽

Fiscal Space ◽

Factor Returns ◽

Latin American Countries ◽

Neoclassical Growth ◽

Laffer Curves

How much fiscal space do Latin American countries have to increase their tax burdens in the long term? This paper provides an answer through Laffer curves estimates for taxes on labor, capital, and consumption for the six largest emerging economies of the region: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Estimates are made using a neoclassical growth model with second-generation human capital and employing data from the national accounts system for the period from 1994 to 2017. Our findings allow us to compare the recent effective tax rates on factor returns against those which would maximize the government's revenues, and therefore to derive the potential tax-related fiscal space. Results suggest that joint fiscal space on labor and capital taxes would reach 6.5% of GDP for the region, on average, and that there are important differences among the countries.

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