Japan needs more foreign direct investment and we want to come up with a road map that gets us much closer to an effective corporate tax rate below 30%.

Foreign investment = slavery.

Foreign money coming into Japan will make big corporation execs rich, but there will be no incentive to help the average worker. Foreigners will just try to exploit Japanese workers as much as possible, because they are not from the same country, so what do they care?

But isn't that what Abenomics is all about? Giving big multinational corporations more power in Japan on the backs of the common Taro working 14 hour days.

Huh? You need a road map to get closer to an effective tax of a certain rate?

You're lowering taxes, you clowns. Not sending a spacecraft into the unknown reaches of space.

Sheesh.

Between income tax, inhabitants' tax, car tax, mandatory pension fund, mandatory health insurance, and consumption tax I'm paying about 40% tax. I don't see why companies should shoulder less of the tax burden than regular citizens.

Between income tax, inhabitants' tax, car tax, mandatory pension fund, mandatory health insurance, and consumption tax I'm paying about 40% tax. I don't see why companies should shoulder less of the tax burden than regular citizens.

Because when the corporations end up paying more tax, they pass the cost on to you. You are the one who is paying corporate taxes, aren't you? The 38% corporate tax which is currently being charged in Japan is added directly to the cost of everything you buy? Do you understand?

Do you understand that any tax increase on any part of the economy is eventually paid for by every member of the economy? Do you understand that most companies pay more in tax than they do on payroll? Do you understand that because of this they cannot hire more people, or increase the pay for their existing staff?

Why do people constantly believe the most famous lie a politician can make, the one where he promises to raise the taxes on the rich to help the working classes? Why don't people understand that this is simply not possible?

Why can't people figure this out? How stupid must people be that they cannot understand that it is impossible to isolate the effect of any tax to any part of the economy? It cannot be done, it has never been possible to do it, it never will be possible, period.

If the corporate tax is raised to 50% next year, this is what will happen. The prices for all goods will be increased by 12%. Of course, prices are already too high for most goods in Japan, so people will buy less of these goods. Sales will drop. Companies will try to reduce costs of their goods by downsizing, outsourcing jobs, etc. And if this isn't enough, they will either shut their doors, or if they can, register their company in Singapore, Malaysia, Indonesia, or some other country where the taxes are lower. The final effect of all of this is that there will be more unemployed people in Japan, the government will collect less tax revenue, and things get worse, which is exactly what has been happening for the last two decades, right?

Japan has the highest corporate tax rate of any developed country, which is why no foreign companies are even remotely interested in setting up in Japan, and why Japanese companies at this very moment are are moving their business, assets, and even some of their people to other countries.

How did people become so foolish?

sangetsu03May. 06, 2014 - 05:50PM JST Because when the corporations end up paying more tax, they pass the cost on to you. You are the one who is paying corporate taxes, aren't you? The 38% corporate tax which is currently being charged in Japan is added directly to the cost of everything you buy? Do you understand?

That's a gross over-simplification of market economics. Companies can increase prices, but only if their competitors also do, and only if international suppliers in overseas companies also do too, etc. Otherwise companies that increase their price end up losing more sales than they make in additional revenue Do you understand?

Do you understand that any tax increase on any part of the economy is eventually paid for by every member of the economy? Do you understand that most companies pay more in tax than they do on payroll? Do you understand that because of this they cannot hire more people, or increase the pay for their existing staff?

Do you understand that Japan has a massive debt that must be repaid. At the moment more than 60% of Japan's tax revenue is going to service that debt. The current system is fairly equitable, with companies and regular people splitting the tax burden fairly evenly. You make the point yourself that if there is a "tax increase on any part of the economy" then it affects the entire economy. If company tax is decreased then individual tax will be increased (in fact this is already on the table). This isn't going to boost the economy, just place less burden on companies and more on individuals, which is inequitable.

Why do people constantly believe the most famous lie a politician can make, the one where he promises to raise the taxes on the rich to help the working classes? Why don't people understand that this is simply not possible?

What are you talking about? We're not talking about increasing the taxes on the rich, we're talking about moving from a roughly equal sharing of the tax burden on all citizens (the current situation) to a situation where the rich (companies and their investors) shoulder LESS of the burden by reducing company taxes.

Why can't people figure this out? How stupid must people be that they cannot understand that it is impossible to isolate the effect of any tax to any part of the economy? It cannot be done, it has never been possible to do it, it never will be possible, period.

As I pointed out, this argument cuts both ways. The total tax revenue will drop temporarily, which will deepen Japan's debt problem and more individual taxes are already on the table to make up the tax shortfall from reducing company taxes. By your argument this will affect companies, putting pressure on them to raise salaries, which will result in companies paying more anyway. A company tax break, at the expense of individuals isn't a solution, it is just window-dressing.

If the corporate tax is raised to 50% next year, this is what will happen.

Nobody is talking about raising the company tax rate, except you. The current system is roughly equal. Leave it that way.

Japan has the highest corporate tax rate of any developed country, which is why no foreign companies are even remotely interested in setting up in Japan, and why Japanese companies at this very moment are are moving their business, assets, and even some of their people to other countries.

Oh, such nonsense. The pattern of Japan's corporate tax revenue as a percentage of GDP perfectly matches that of the OECD, and is actually nearly a full percentage point higher. This scare-mongering that minor increases or decreases in company tax will cause companies to up and leave the country is pure fiction. If that was the case then with a 39.5% tax rate no company would be based in the U.S.A. and every company in the world would have its headquarters in Ireland with a 12.5% company tax rate. Clearly this isn't the case.

How did people become so foolish?

By listening to people like you?

"Foreign money coming into Japan will make big corporation execs rich,"

I've known Japanese who work for Amazon and Yahoo in rank and file positions, and they were both paid extremely well. FDI like this brings jobs and salaries that Japan otherwise wouldn't have.

"How stupid must people be that they cannot understand that it is impossible to isolate the effect of any tax to any part of the economy?"

So your theory is that tax hikes make things expensive for everybody? That's odd. When I lived in London in early 1980s, taxes were around 80% for rich people and at least 40% or corporations. And guess what? The city was pleasantly affordable. A flat in trendy Notting Hill was around 30,000 pounds (!!!), now worth about 600,000 pounds.

But after Thatcher and successive gov't's cut rich and corporate taxes, the cost of living in London skyrocketed and now middle income people under normal circumstances can simply no longer afford to live there. The millionaire and billionaire foreigners are moving in in droves.

What does that (a real world case, as opposed to your delusional imagination) say about your theory?

Balance of payments is zero-sum game. The sum of the net credit of creditor nations equals the sum of the net debt of debtor nations.

Japan is the largest net creditor nation. What is the point of putting more money into Japan? http://www.financialsense.com/contributors/leslie-cuadra/2011/08/31/list-of-worlds-largest-creditor-and-debtor-nations

If a net debtor nation wants to invest into Japan, some net creditor country must take care of the financing of the investment for the net debtor nation. The country to provide financing would be Japan. So, the money goes from Japan to the investing country and comes back to Japan as investment. I do not see any point in such circular transaction.