Corporate tax cut in Japan: Be careful what you wish for

I run 2 small companies and the higher the corporation tax, the more likely we are to spend any profits in order to avoid the tax. This is good for the economy. So whilst I'd be happy from a personal perspective to see a corporate tax reduction, I'm not convinced this is such a great idea.

Perhaps 38% is a bit high, but these are taxes on profits, so if companies want to reinvest revenue they can, they won't be affected by the 38% tax. Reducing taxes on company profits really only benefits the rich, whereas increasing sales tax hurts the poor the most. The last thing Japan needs is inequality to rise as it has in a despicable and frightening way in the US and more recently the UK. Inequality is at the root of most of the problems in the west and the lack of inequality in Japan underpins most of the relative peace, prosperity and social harmony seen in Japan today.

Perhaps 38% is a bit high, but these are taxes on profits, so if companies want to reinvest revenue they can, they won't be affected by the 38% tax. Reducing taxes on company profits really only benefits the rich, whereas increasing sales tax hurts the poor the most. The last thing Japan needs is inequality to rise as it has in a despicable and frightening way in the US and more recently the UK. Inequality is at the root of most of the problems in the west and the lack of inequality in Japan underpins most of the relative peace, prosperity and social harmony seen in Japan today.

Unforunately, this is not true. Taxes on companies are always, with 100% certainty, passed directly to the consumers, every time. There is no tax which can be levied on the rich, or on corporations, which does not directly affect the middle or poor classes. This is because companies and the rich provide most of the jobs, products, and services all of us use.

It continues to amaze me that people don't understand this basic principle of economics.

Unforunately, this is not true.

I think you misunderstand interuni`s point. He was just saying that, as a matter of accounting, corporations can avoid the tax completely by reinvesting their income into the business or making other expenditures which would reduce their taxable income to zero (basically the same point ADK99 made). This would not be passed on to consumers because there would be nothing to pass on - no taxes would be paid regardless of the tax rate (which, as the article states, is the case with about 70% of Japanese corporations).