Japanese manufacturers, flush with cash, start spending on technology

This is great news, but manufacturers could've done this years ago. Deflation is no excuse for not investing. This reveals a terrible, lackadaisical mindset in industry leaders, waiting for a political programme to incentivize them into investing. Abenomics didn't create this reserve of cash; it's the result of conventional thinking, and stoginess.

Abenomics is more about slowing the economy down than boosting it. Deficit spending, and tax hikes will not produce a "virtuous cycle". It kicks consumers in the teeth, devalues the yen (which will make imports more expensive in the long term).

Certainly, it's good that manufacturers are investing in technology, but to hail Abenomics has the cause of this wealth is fallacious and self-serving. The Abe government has been strong-arming companies into making Abenomics work, not facilitating an economic environment conducive to investment, and consumer spending.

Abenomics also relies on large, old, established corporations. It does not encourage, or promote entrepreneurial ventures. If the government were truly interested in increasing consumer spending, it would have left the consumption tax at (the very reasonable rate) of 5%, and cut taxes on income (not to mention wasteful spending).

If they are so flush with cash, then why does Abe and his gang want to offer more corporate goodies, such as tax breaks and cheap capital?

good news. Better than them buying foreign companies which has historically been a sign of a market top and has typically caused losses to the Japanese purchasers.

If they are so flush with cash, then why does Abe and his gang want to offer more corporate goodies, such as tax breaks and cheap capital?

Because they are not "flush with cash", the above article was written by a tool. Japanese companies have seen their stock prices and market cap soar due to the side effects of monetary easing and stimulus spending, but few have actually seen any increase in net business or sales. These companies know that their stock values are artificially overinflated, and that the increases in value they have seen this year may vanish by next year.

Abe and his government know that regardless of the stock prices, Japanese companies have seen little or no increase in substantial value, and unless these companies can start earning real profits, there is little hope for the future Japanese economy. Most Japanese companies which can are divesting from Japan as quickly as their means will allow. Abe needs to try to stop this exodus.

Take a look at the top domestic Japanese companies' financials for the past couple of years, these are public records. You will see that roughly eight out of ten have lost money. Despite their losses, their stock prices have gone up, giving the illusion that these companies have been experiencing growth. The lion's share of the effect of the goverment's monetary policies have benefitted the stock market, but have not improved anyone else's lot. How much more are you spending now than you were last year? How much has your income increased? If your answer (like most other people's) was "none and none", then exactly how is it that companies are now really "flush with cash?"

So consumption tax was raised to offset corporate tax reduction because...???

yildiray

So consumption tax was raised to offset corporate tax reduction because...???

The reason given for the tax hike was to reduce the national debt. The actual reason is to given the appearance of doing something about the country's finances without actually do anything to fix the economy, or the debt.

Cutting corporate taxes is not really a bad idea: Japan's corporate rates were sky high (something near 40%). The problem is Abenomics doesn't extend that tax code largess to working people or families.

Cutting corporate taxes is not really a bad idea: Japan's corporate rates were sky high (something near 40%). The problem is Abenomics doesn't extend that tax code largess to working people or families.

This is not entirely true. The corporate tax rate in Japan is 38.6%, which is the second-highest among developed nations. What many people fail to realize is that the cost of the corporate tax is added to the cost of the goods and services which companies provide. A reduction in the corporate tax would reduce the cost of goods and services to consumers, so this reduction is extended to working people and families, just as an increase in the corporate tax would be extended to working people and families.

I agree, a reduced tax rate on corporations, leads to a lower price on goods and services. I don't think there's anything in my post that disputes that.

However, taxation on income, especially for working people, is very heavy, even moreso when one considers all the other levies the government imposes. Sales taxes, health insurance premiums, taxes on property and buildings, etc.

Governments (all over the world) do not extend their tax code largess to working people and their families, especially those with low to median incomes. That is completely true.

Businesses are usually good at passing savings on to their customers, especially in competitive industries. However, that is a business decision, not a government one.

Income taxes are long overdue for serious cuts in Japan, and most developed countries. If Abenomics were truly about achieving a "virtuous cycle" it would bring in tax cuts on income for working people, across the board, so that net income goes up.