An Estimation of the Lock-In Effect of Capital Gains Taxation

Yamazaki, Fukuju; Idee, Takako

doi:10.1006/jjie.1996.0351

Cited by 4 publications

(2 citation statements)

References 14 publications

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“…The capital gains tax is also likely to be responsible for under-utilisation of land through two channels. First, frequent changes in tax rates might discourage the disposal of land (Table 9) (Yamazaki and Idee, 1997). Second, the structure of the tax schedule encourages long-term holding since the rate comes down in steps as the holding period increases, leaving long-term gains taxed at only half the rate applied to short-term gains.…”

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The Tax System in Japan

Dalsgaard¹,

Kawagoe²

2000

OECD Economics Department Working Papers

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Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format ECO/WKP(2000)4 2 ABSTRACT/RÉSUMÉ The Japanese tax system applies relatively low marginal tax rates on most economic activities which, in combination with moderate tax elasticities of the bases, indicate that the overall distortion from the tax system (the excess burden) is probably modest compared with other OECD countries. Recent sizeable reductions in statutory marginal tax rates in both the personal and the corporate tax system have strengthened this feature. However, significant loopholes and non-neutralities are in place in key parts of the tax system, leading to potentially substantial efficiency losses once the tax-to-GDP ratio starts rising to accommodate the restoration of public finances as well as the expenditure needs related to the ageing population. There is thus an immediate need to start broadening the tax base in major parts of the system, including reducing the vast allowances and credits in the personal income tax system; incorporating bonuses in the base for social security contributions; increasing the effective taxation of pensions. Furthermore, the effective taxation of the self-employed could be strengthened by stepping up enforcement and by shifting the base for taxation from income to value added. Property taxes, in particular the inheritance tax, distort prices on property and land and should be made more neutral through base broadening and changes in the rate structure. Another main concern is the non-neutrality caused by differential treatment in the corporate tax system of different investment and financing sources, implying an excessive reliance on debt financing in the corporate sector. With respect to tax administration, this could benefit from the introduction of a taxpayer identification number system. Such a system is applied in most other OECD countries. Finally, local government finances would be stabilised by a shift in the base of local corporate taxation to a value added type tax.

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“…Although the extra corporate tax on short-term capital gains on land was eliminated in FY 1998, the tax rates for individual transactions still provide an incentive to long-term holding. Yamazaki and Idee (1997) examined the effects of capital gains taxes on the transfer of agricultural land to other uses and found lock-in effects only in rural prefectures.…”

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The Tax System in Japan

Dalsgaard¹,

Kawagoe²

2000

OECD Economics Department Working Papers

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The effects of regulations on land transactions: The case of Korea

Kim¹

2001

Applied Economics Letters

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This paper examines the relationship between government regulations and land transactions using Korean data for 1994. The results indicate that a heavy burden put on land ownership does not affect the frequency and amount of land transacted, nor does it accelerate the urbanization process. However, regulations of the sale and acquisition of land are important influences on the decisions of market players.

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The Effects of Bequest Tax on Land Prices and Land Use

Yamazaki

1999

Japanese Econ Rev

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The paper examines whether bequest taxation affects land use, using an overlappinggenerations model. In Japan, in assessing land for the purpose of inheritance taxation, the assessed value is less than the market value; however, other assets are valued at market value. Such an asymmetry creates a greater incentive for the older generation to hold land, because the probability of decease is higher for older than younger persons. With constant technology available in each generation, the inheritance tax is found to lead to inef®cient land use, sluggish conversion of land over time and higher land prices. JEL Classi®cation Numbers: H24, R14.

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An Estimation of the Lock-In Effect of Capital Gains Taxation

Cited by 4 publications

References 14 publications

The Tax System in Japan

The Tax System in Japan

The effects of regulations on land transactions: The case of Korea

The Effects of Bequest Tax on Land Prices and Land Use

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