Estimates of average marginal tax rates on factor incomes in Japan

Abstract

In this paper, we estimate average marginal tax rates on factor incomes in Japan from 1963 to 2007. We adapt the method of D.H. Joines [Estimates of effective marginal tax rates on factor incomes. J. Bus. 54 (2), 191–226.] to the Japanese tax and social security system. Average marginal tax rates on labor incomes without social security premiums range from 14% to 21%, whereas the rates on incomes with social security have increased from 21% to 33%. Tax rates on capital incomes have fluctuated between 35% and 58%. We also compare our estimates with average tax rates and the wedges from business cycle accounting.