Yasue Hakata

Correspondence: Yasue Hakata, hakata@u-gakugei.ac.jp

Department of Economics, Tokyo Gakugei University, Tokyo, Japan

pdf (300.51 Kb) | doi: https://doi.org/10.47260/bae/928

Abstract

This study provides evidence that under the Japanese local individual income tax system, individuals smooth their after-tax income by choosing the timing of their tax payments. We construct a monthly data set of Japanese local taxes with sample periods for over 26 years. The results show that though the tax amounts are pre-determined in one-year units by the system, individuals pay more taxes during months when their incomes are high, such as in “bonus” periods, than other months in a year. The t-statistics for means indicates that there exist significant upward deviations during these months.

Keywords:

  Consumption smoothing; Local income tax; Inter-temporal decision making; Mean test; Levene test.

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