politics

Gov't considering 2.5% corporate tax cut from fiscal 2015: Nikkei

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Where is my tax-cut? Would like to have my income increase by those 2.5%.

Who do you think pays corporate tax? Companies? Of course not. Corporate tax is passed by companies onto their staff and customers, including you. If the current tax is 35%, that 35% is compensated for by hiring fewer staff, or increasing the prices of goods you have to pay.

Understand?

3 ( +6 / -3 )

Sangetsu03: Corporate tax is passed by companies onto their staff and customers.

Really? not the shareholders? I think you misunderstand the founding principles of capitalism - greed and profit.

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Very few of the big corporations pay tax anyway? Must be a sorce of mirth when Abe and his cousins and friends have dinner together fu fu fu.

0 ( +1 / -1 )

2.5 % off of 35% is hardly a "Third Arrow".

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Really? not the shareholders? I think you misunderstand the founding principles of capitalism - greed and profit.

I would much rather live in a capitalist society than the alternative. If I am greedy, they I can work to satisfy my greed. To make money I have to produce goods or services people want. To produce these goods or services, I need to buy materials, hire staff, and hire the services of other companies for transport, insurance, distribution, etc. My greed helps provide jobs and income to other people. The greedier I am, the more I have to make, the more I have to make, the more people I need to help. Right?

1 ( +4 / -3 )

Strangle the masses.

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The cuts will only benefit the top 1% not the people. the gap will widen.

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2.5% is nothing , it means a lot of money only for big corporation and actually to those which actually pay taxes....

0 ( +1 / -1 )

Hurrah!! more money for the plutocrats. i am currently fighting the taxman over my personal tax. No leniency for me.....

-2 ( +0 / -2 )

This idea of cutting taxes for businesses and raising the peoples taxes is working well for Americans..... Sorry I mean American Businesses, the people are in very bad financial shape. And it is also a factor in the civil unrest on the US.

-2 ( +1 / -3 )

Really? not the shareholders?

Why would anyone invest in a company that didn't pay them any dividends because of high corporate tax? You have to keep the shareholders happy, otherwise you'll go bust from lack of investment.

1 ( +1 / -0 )

"You have to keep the shareholders happy,"

Postwar Japan had a corporate model that didnt give a t*ss about keeping shareholders happy. The economy saw extraordinary growth and progress during that period, which made Japan the envy of the world.

-1 ( +1 / -2 )

Corporate tax is passed by companies onto their staff and customers, including you.

sangetsu03 is commenting his imagination again without reading Japanese papers. The companies are hoarding it.

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Postwar Japan had a corporate model that didnt give a t*ss about keeping shareholders happy. The economy saw extraordinary growth and progress during that period, which made Japan the envy of the world.

Uh, so what? The bubble burst decades ago, and Japan is certainly no longer "the envy of the world". In fact, in many categories/industries it is no longer even competitive, and the world economy has become much more global. And higher taxes just make Japanese companies less competitive.

-1 ( +2 / -3 )

This is a classic case of fiddling while Rome burns. Corporate Japan, excluding the insurance and financial sector, is stubbornly sitting on over ¥300 trillion ($2.5 trillion) in excess reserves (MOF), BOJ needs a rod not a carrot. Oil is heading south to the tune of $55 per barrel, Saudi Kingdom is more than happy to force the price down to $40. This coupled with Russia in the throws of a full blown currency crisis, which could see traders eyeing the yen as a safe haven, at least give Abe and the BOJ some breathing space. Falling Oil prices alone could well benefit to the tune of ¥9 + trillion, sure to end up in the pocket of the hard pressed consumer.

0 ( +1 / -1 )

sangetsu03 is commenting his imagination again without reading Japanese papers. The companies are hoarding it.

Tell me Tina, what business or economic experience do you have?

I don't need the newspapers to tell me about business or finance. I live and work in the middle of it, my office is surrounded by banks, the BOJ itself is across the street, I can see it from my window. I do business with these people, I have lunch with them. Why should I read a newspaper when I can talk to the people themselves?

Ask yourself this simple and fundamental question. If companies are hoarding cash, why are they doing so? For anyone who knows anything about business, the first rule is that cash which is not being used might as well not exist.

Take a trip back in time to 2008 and the financial crisis. Many companies were not prepared for the collapse, and did not have the cash to get through it, so they went bankrupt, and their employees lost their jobs. We had plenty of blame assigned to these companies for not managing themselves better, and not protecting their employees. Companies learned a lesson, and that was that they had better have enough cash to get through tough times.

Next, how much money did Japanese companies lose from 2008 to 2013? Panasonic lost about $25 billion over that five year period. This year they will earn about $1.5 billion in profit. How much cash do you think Panasonic is hoarding? 70% of Japanese companies will report a loss for 2014, how much cash are they hoarding? The simple fact is that most Jaoanese companies are in debt, they are not hoarding cash.

Companies now have strong market capitilization from the stock market boom, but few have seen any profit from growth or sales. The stock boom is being fueled by Abe's easy money policies. Since interest is nearly zero, banks and companies can borrow money from the central bank to buy stocks, which pushes up stock prices. We have seen only about 1% of GDP growth since Abe came to office, but we have seen 70% growth in the stock market. If sales and growth are barely growing, then why are stocks moving so high? Because companies are trying to borrow their way to prosperity, like the government has been trying to do for decades. Companies will have as little success at the practice as the government has had.

Really? not the shareholders? I think you misunderstand the founding principles of capitalism - greed and profit.

Who are the shareholders? Maybe you are. You may not own stock in any of these companies, but if you have an insurance policy, or have an open loan with a bank for a credit card, car, or mortgage, then you are very likely a shareholder in many companies. And the profits made by these companies are passed on to their shareholders, and partially fund your insurance policy, or are one of the assets your bank counts on to allow them to lend you, or those whom you do business with, money.

The great problem we have in politics is the nearly blind ignorance people have of economic matters, and how even small things like a 2.5% tax cut or increase indirectly affects can affect their own lives.

About 70% of corporate tax is compensated for by reducing labor costs, the remaining 30% is passed on to consumers.

In normal times, a company's profit is always used to fund growth, because growth is the basic foundation of capitalism. Money which is simply spent is money which is lost. Money which is invested in growth provides a return. Growth requires producing and hiring more, which provides people with jobs and money, which they use to buy more goods, whch creates profits, which are reinvested in more growth. When profits decrease, do to taxation, natural conditions, or other causes, there is less to invest or pay their staff or stockholders (which you yourself may unkowingly may be).

1 ( +2 / -1 )

If companies are hoarding cash, why are they doing so? For anyone who knows anything about business, the first rule is that cash which is not being used might as well not exist.

I never said companies hoarding cash is a good thing, but that seems to be what's happening right now.

About 70% of corporate tax is compensated for by reducing labor costs, the remaining 30% is passed on to consumers.

I was talking about tax cut, and the tax cut don't seem to pass on to customers or salaries.

0 ( +2 / -2 )

Tax cut for companies is good for business, this allows them growth and to employ more staff, staff pay tax on wages so in effect it comes back to the govt anyway.

Jerseyboy this tax cut is not the 3rd arrow, only 1 very, very, small part of it, and there are many small parts that will make it up in total.

How about when abe announces relief for households will you all still be moaning ? Stay tuned for more govt announcements in regard to cuts and economic help, some of you will be surprised what's coming.

1 ( +2 / -1 )

I was talking about tax cut, and the tax cut don't seem to pass on to customers or salaries.

How would we know? There has never been a tax cut, has there?

Most companies spend more on tax than they do on payroll, do you realize that? Every yen spent on tax is one yen which cannot be spent on pay or benefits.

-1 ( +2 / -3 )

70% of Japanese companies will report a loss for 2014,

You put this a lot in your post and to my understanding, it means 70% of the companies did not have a 'taxable' income which can be misinterpreted comparing to U.S. for instance where there is an system of S corporation. In other words, a company can have a profit for the fiscal year but not have a 'taxable' income due to carryover losses.

-1 ( +2 / -3 )

You put this a lot in your post and to my understanding, it means 70% of the companies did not have a 'taxable' income which can be misinterpreted comparing to U.S. for instance where there is an system of S corporation. In other words, a company can have a profit for the fiscal year but not have a 'taxable' income due to carryover losses.

You are incorrect, in Japan these companies are classified by the government as "loss-producing". What is your definition of "loss-producing"? Having no taxable income? Or having no income at all?

-3 ( +0 / -3 )

You are incorrect, in Japan these companies are classified by the government as "loss-producing". What is your definition of "loss-producing"? Having no taxable income? Or having no income at all?

Having no taxable income which may be as a result of loss carryover from previous years. Like I said, the existence of S Corporations which eliminates such factors skews the percentage. I don't know why this is so confusing to you.

-1 ( +0 / -1 )

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