[cstaylor]

The report also recommended hiking the consumption tax from the current 5 percent.

This is old news. Like I said last month, before they stick their hands in deeper, clean up the existing system and trim the fat... otherwise all we'll have are richer politicians and yakuza, and nothing will improve.

However, upping the income tax rate would provide me an incentive to pack up and head home... one of the nice things about being here is that the income tax rate is lower than what I paid in California. I'll just pencil that reason in beneath "Natto" and "Racism".

[kamome]

Well, lowering the corporate tax rate but making it apply to a larger number of corporations makes sense for a couple of reasons:

a) Japan's effective corporate tax rate is quite high compared to other countries (42%), which retards foreign investment and encourages income shifting to other jurisdictions,
b) most domestic corporations are already in the red and therefore have not been paying taxes for a number of years, thus depriving the government of needed revenue.

So, if you lower the effective rate and force more companies to pay some taxes, the government might be able to pull itself out of debt (although the Yakuza/corrupt politician connection will probably keep Japan in recession anyway).