Skip to comments.Tracing the Japanese Tax Experiment (The USA will now have the world's highest corporate tax rate)
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.
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The ideal corporate tax rate should be 0.
If you want less of something you tax it. Kind of tells you where so many of our leaders’ intentions reside.
Exactly. Corporations don’t pay taxes. Its just another invisible tax on the citizens.
The power to tax is the power to destroy.
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.
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.
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.