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Tracing the Japanese Tax Experiment (The USA will now have the world's highest corporate tax rate)
Real Clear Markets ^ | 01/08/2011 | Brian Koenig

Posted on 01/09/2011 5:45:34 AM PST by SeekAndFind

The United States' current corporate tax rate is far from competitive. Average combined state and federal corporate taxes are 39.2 percent, second highest among industrialized nations, just under Japan's 39.5 percent rate.

But this positioning is about to change. On December 16, 2010, Prime Minister Naoto Kan approved a five percent cut on Japan's corporate tax, lowering the rate to under 35 percent.

Iceland's corporate tax rate currently stands at 18 percent; Poland 19 percent; Sweden 25 percent; and Mexico 28 percent. Overall, the average corporate tax rate among OECD nations hovers around 27 percent, with the United States a whole 12 percentage points higher than the international average.

Japan's reformed tax policy will earn the United States the gold medal for the highest tax on business profits, giving American businesses the steepest tax burden in the industrialized world.

According to Trade Minister Akihiro Ohata, Prime Minister Kan's directive is to "lower corporate tax rates that are too high compared with international standards, and to create a world-class investment environment." Japan's Trade Ministry predicts the tax cut will increase GDP by 2.6 percent, or 14.4 trillion yen ($172 billion), over the next three years, as it is expected to churn job growth, increase domestic investment, and expand business operations.

"The business community intends to aggressively work on domestic investment and job creation as new growth strategy is implemented," asserted Chief Cabinet Secretary Yoshito Sengoku. The administration's mission is to reduce penalties levied on profit as a way of boosting internal growth and private sector job creation; all this counter to previous policies that tilted toward bailouts and anti-business rhetoric.

In the past two decades Japan's economy has suffered from falling prices thanks to a yen that tripled in value versus gold, rising unemployment, and low productivity which naturally reduced consumption.

(Excerpt) Read more at 1.realclearmarkets.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: corporatetax; japan; taxrates; usa

1 posted on 01/09/2011 5:45:41 AM PST by SeekAndFind
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To: SeekAndFind

The ideal corporate tax rate should be 0.


2 posted on 01/09/2011 5:54:41 AM PST by pnh102 (Regarding liberalism, always attribute to malice what you think can be explained by stupidity. - Me)
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To: SeekAndFind

If you want less of something you tax it. Kind of tells you where so many of our leaders’ intentions reside.


3 posted on 01/09/2011 6:23:12 AM PST by newheart (Please don't shoot at the thermonuclear weapons. --Vic Deakins)
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To: pnh102

Exactly. Corporations don’t pay taxes. Its just another invisible tax on the citizens.


4 posted on 01/09/2011 6:26:28 AM PST by Dan Nunn (Support the NRA!)
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To: newheart

The power to tax is the power to destroy.


5 posted on 01/09/2011 6:28:55 AM PST by null and void (We are now in day 719 of our national holiday from reality. - 0bama really isn't one of US.)
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To: SeekAndFind

American firms are, on average at a 17% competitive disadvantage with their foreign counterparts due to the high U.S. corporate income tax rate. The result has been more American firms moving their assets overseas. There has been a solution for eliminating the corporate income tax altogether before each session of Congress since 1999.

It’s the Fair Tax Act(HR25). The Fair Tax will replace all federal income taxes with a national sales tax and abolish the IRS! completely eliminating the corporate income tax will make U.S. firms once again competitive thereby returning their plant assets to the U.S. and in turn creating more jobs in the U.S. Also imports and domestic production are on a level playing field. Exported goods are not subject to the Fair Tax, since they are not consumed in the U.S. but imported goods sold in the U.S. are subject to the Fair Tax because these products are consumed domestically.


6 posted on 01/09/2011 6:34:26 AM PST by Defend Liberty
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To: SeekAndFind

bookmark


7 posted on 01/09/2011 7:56:26 AM PST by pepperdog (Why are Democrats Afraid of a Voter ID Law?)
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To: Defend Liberty

But what is the “effective corporate tax rate” in the US compared to other countries? I don’t know the answer, but the opponents of lowering the corporate rate here always say that the effective rate is lower than the statutory rate.


8 posted on 01/09/2011 8:24:06 AM PST by secretagent
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To: secretagent
But what is the “effective corporate tax rate” in the US compared to other countries? I don’t know the answer, but the opponents of lowering the corporate rate here always say that the effective rate is lower than the statutory rate.

An excerpt from the link below: "This bulletin presents new estimates showing that the United States has one of the highest effective tax rates on corporate capital in the world at 36 percent, which compares to an average of just 19.5 percent for 79 other countries studied."

Cutting the Effective Corporate Tax Rate That doesn't take into account the high compliance costs associated with the federal income tax code.
9 posted on 01/09/2011 10:16:55 AM PST by Defend Liberty
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To: Dan Nunn
The owners pay the corporate income tax, then it is double taxed as dividends, then it is tripled tax if taxable under the estate/death tax. And if spent subject to sales, telephone and other hidden taxes.

Quarterly estimated taxes are due during the taxable year before final taxable profits are determined, subject to penalties if not sufficiently paid on time.

Also when corporations buy products for consumption or are used in the products that they sell, corporate taxes are also included in price paid for those items.

Also Companies pay taxes on profits that are reinvested in the company to support ongoing operations.

Why is the government entitled to our profits? The cost of complying to pay taxes is exorbitant. We need to tell government what they can spend, and all people pay a proportional amount.

10 posted on 01/09/2011 10:25:21 AM PST by ADSUM (Democracy works when citizens get involved and keep government honest.)
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