nach oben

Erschienen in:

2023 | OriginalPaper | Buchkapitel

2. Corporate Taxation and Regional Economic Development in Japan: A Panel Analysis of Prefectural-Level Data

verfasst von : Masahiro Shinohara

Erschienen in: Industrial Location and Vitalization of Regional Economy

Verlag: Springer Nature Singapore

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Japan’s Business Location Promotion Law was enacted with the aim of revitalizing regional economies through decentralized industrial growth. This paper analyzes the effect of corporate tax policy—modeling tax burden as the marginal effective tax rate (METR) at the prefectural level—on regional economic development by estimating its impact on firms’ decisions about where to locate new facilities. The key findings can be summarized as follows: (1) The effect of corporate taxation on regional economic development—modeled as employment in the manufacturing sector—is significantly negative at the national level. However, when the country is split into two categories—Japan’s three major metropolitan areas versus all other prefectures (“provincial regions”)—the effect is not statistically significant in either category. (2) Several independent variables unrelated to tax burden also influence regional economic development. Notably, market characteristics—modeled as population size—has a significantly positive effect both at the national level and separately within each regional category. The nationwide model indicates that the effect of market characteristics is considerably larger than that of corporate taxation. (3) The public service of highway infrastructure has a significantly positive impact on manufacturing employment within Japan’s three major metropolitan areas.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel The Effect of Regulation on a Dominant Firm to Protect Fringe Firms in a Local Market

Nächstes Kapitel Economies of Scale and Cumulative Causation

Matsubara and Kamakura (2020), p. 219.

Act on Formation and Development of Regional Industrial Clusters through Promotion of Establishment of New Business Facilities.

Act on Strengthening a Framework for Regional Growth and Development by Promoting Regional Economy Advancement Projects.

See Due (1961), p. 171.

In the Japanese context, an inter-region analysis would compare trends in different prefectures, while an intra-region analysis would compare trends between different municipalities within a specific prefecture.

The four-year interval was chosen (i.e., 2019 was selected instead of 2020) because at the time during which the study was performed, 2018 was the latest year for which real capital stock data were available needed to estimate the METR.

In Japan, “the three major metropolitan areas” (san-daitoshi-ken) refers to the three largest metropolises in the country and their neighboring prefectures, which are heavily urbanized with interconnected economies, i.e., the Tokyo Metropolitan Area (Tokyo, Kanagawa, Saitama, Chiba, Ibaraki), the Nagoya Metropolitan Area (Aichi, Gifu, Mie), and the Osaka Metropolitan Area (Osaka, Hyogo, Kyoto, Nara, Wakayama). Government data collected since 2000 indicated that businesses are increasingly choosing to locate new factories in these three giant conurbations (2000: 27.2%, 2005: 34.3%, 2010: 37.3%, 2015: 40.0%, 2020: 42.6%; Survey of Factory Location Trends, METI).

See Wasylenko (1997), p. 39.

This categorization scheme was drawn exclusively from the works of Wasylenko (1981, 1997).

It stands to reason that information and travel costs would consume a greater percentage of earnings for smaller enterprises, which may be one reason why small business owners may limit their options to familiar areas. See Wasylenko (1981), p. 160.

See Fukazawa (2020), p. 43.

See Wasylenko (1981), p. 157.

Technology-intensive industries tend to locate preferentially in areas with higher population densities and higher levels of worker education. Arauzo-Carod et al. (2009), p. 703.

For detailed information on how the METR is defined, see Devereux (2003), p. 7.

See Nakata (2016), p. 7.

Since FY2004, ordinary corporations with capital exceeding 100 million yen are subject to pro forma standard taxation (a.k.a. “size-based corporate taxation”), which consists of a value-added levy (based on total remuneration plus net interest/rent expenses) and a capital levy (based on total capital stock, etc.), in addition to an income levy (based on corporate income). Roughly 1% of all corporate entities in Japan are subject to pro forma standard taxation.

For details on how the present discounted value of the preferential treatment of investments A, discount rate ρ, and economic depreciation rate δ are estimated, see Iwata et al. (1987).

If land price (LP) were not included in the regression model, the value of the coefficient for the METR (TAX) would reflect the net effect excluding capitalization.

Gabe and Bell (2004) identified an important trade-off in fiscal policy in this regard: when municipalities seeking economic growth try to attract businesses by cutting taxes, public services suffer as a consequence, which dampens economic growth in turn.

Arauzo-Carod, et al. (2009). Empirical studies in industrial location: An assessment of their methods and results. Journal of Regional Science, 50(3), 685–711.CrossRef

Bartik, T. J. (1991), Who Benefits From State and Local Economic Development Policies? W.E. UPJOHN INSTITUTE for Employment Research.

Bartik, T. J. (1992). The effects of state and local taxes on economic development: A review of recent research. Economic Development Quarterly, 6(1), 102–110.CrossRef

Devereux, M.P. (2003). Measuring taxes on income from capital. CESIFO WORKING PAPER, No. 962.

Due, J. F. (1961). Studies of state-local tax influences on location of industry. National Tax Journal, June 1961, 163–173.

Fisher, R. C. (1997). The effects of state and local public services on economic development. New England Economic Review, March–April, 53–67.

Fukazawa, E. (2020). Local government taxation of corporations: Why is the tax rate in Tokyo so high?”, The Reference, Vol. 830, pp. 31–57, NDL Research and Legislative Reference Bureau (in Japanese).

Fuzisawa, S. (2012). Effects of competition for subsidies among municipalities on industrial agglomeration. City Planning Program, National Graduate Institute for Policy Studies (in Japanese).

Gabe, T. M., & Bell, K. P. (2004). Tradeoffs between local taxes and government spending as determinants of business location. Journal of Regional Science, 44(1), 21–41.CrossRef

Gaku, K. (2000). Determinants of inter-regional plant location choice: Empirical study in Japan. JCER economic journal, No. 41, pp. 92–109, Japan Center for Economic Research (in Japanese).

Hanson, A. (2019). Taxes and economic development: An update on the state of the economic literature. Working Paper WP19AH2, Lincoln Institute of Land Policy.

Iwata, K., Suzuki, I., & Yoshida, A. (1987). Capital cost of business investment and tax system. The Economic Analysis, Vol.107, Economic and Social Research Institute, Economic Planning Agency, pp.75–135 (in Japanese).

Matsubara, H., & Kamakura, M. (2020). Economic Geography on Industrial Plant (new revision), Hara shobo (in Japanese).

Nakata, K. (2016). What types of firms relocate their headquarters and why?: Analyzing the effects of the dual corporate tax system. RIETI Discussion Paper Series, 16-J-055, The Research Institute of Economy, Trade and Industry (in Japanese).

Newman, R. J., & Sullivan, D. H. (1988). Econometric analysis of business tax impacts on industrial location: What do we know, and how do we know it? Journal of Urban Economics, 23, 215–234.CrossRef

Oakland, W. H. (1978). Local taxes and intraurban industrial location: A survey. In Break, G.F. (ed), Metropolitan Financing and Growth Management Policies. The University of Wisconsin Press.

Ogawa, R., & Ishida, T. (2013). Quantitative study on factory location advantages of regional areas. The Economic and Business Review, 25, 13–22 (in Japanese).

Ogawa, R., & Ishida, T. (2016). Attracting industrial plant to provincial cities based on the analysis of locational factors. Studies in Regional Science, 46(2), 199–213 (in Japanese).CrossRef

Papke, L. E. (1991). Interstate business tax differentials and new firm location: Evidence from panel data. Journal of Public Economics, 45(2), 47–68.CrossRef

Plaut, T. R., & Pluta, J. E. (1983). Taxes and expenditures, and state industrial growth in the United States. Southern Economic Journal, 50(1), 99–119.CrossRef

Takao, K., Tsutsumi, M., & Kikukawa, Y. (2018). Spatial modeling of industrial location determinants in Japan: Empirical analysis using spatial econometric approaches. Review of Urban & Regional Development Studies, 30(1), 26–43.CrossRef

Wasylenko, M. J. (1981). The location of firms: The role of taxes and fiscal incentives. In Bahl, R. (ed), Urban Government Finance:Emerging Trends, SAGE Publications, chap.6.

Wasylenko, M. J. (1985). Local tax policy and industrial location: A review of the Evidence. Proceedins of the Annual Conference on Taxation Held under the Auspices of the National Tax Association, pp. 222–228. Tax Institute of America.

Wasylenko, M. J. (1997). Taxation and economic development: The state of the economic literature. New England Economic Review, March–April, pp. 37–52.

Titel: Corporate Taxation and Regional Economic Development in Japan: A Panel Analysis of Prefectural-Level Data
verfasst von: Masahiro Shinohara
Verlag: Springer Nature Singapore
Buch: Industrial Location and Vitalization of Regional Economy
Print ISBN: 978-981-19-8127-2

Electronic ISBN: 978-981-19-8128-9

Copyright-Jahr: 2023
DOI: https://doi.org/10.1007/978-981-19-8128-9_2

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Springer Professional "Wirtschaft"