ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Do People Smooth their After-Tax Income? Evidence from Japanese Local Tax

Yasue Hakata

Correspondence: Yasue Hakata,

Department of Economics, Tokyo Gakugei University, Tokyo, Japan

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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.


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


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