The response of firms to eligibility thresholds: Evidence from the Japanese value-added tax

• 成果类型: Article
• 署名作者: Onji, Kazuki
• 署名单位: Australian National University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2008.12.003
• 发表日期: 2009
• 页码: 766-775
• 关键词: H32; H25; L22; Tax avoidance; Business group; Value-added tax; Firm size distribution

摘要

It is common to define benefit eligibility for small business policies by restrictions on the firm size. This paper documents the effects of the value-added tax (VAT) threshold in Japan, focusing on the incentives for a large firm to masquerade as many small firms by separately incorporating business segments. A comparison of the corporate size distributions before and after the VAT introduction of 1989 shows a clustering of corporations just below the threshold-a pattern that is attributable to the behavioral responses. To rule out the confounding influences of the changes in the company attributes over the years, we applied a semiparametric density decomposition technique developed by DiNardo, Fortin. and Lemieux (DiNardo J., Fortin N.M., Lemieux T., Labor market institutions and the distribution of wages, 1973-1992: a semiparametric approach. Econometrica 1996; 64; 1001-1044). This study suggests that the masquerading behavior by firms may be commonplace in other settings. (C) 2008 Elsevier B.V. All rights reserved.