Japan-- Tax

Taxation in Japan is based primarily upon a national income tax and a residential tax based upon one's area of residence. A consumption tax (currently 5%) was introduced in 1989.

Income Tax Rates in Japan:
Individual income tax rates in Japan are progressive, up to 40%.

Taxable income (Yen)          Tax Rate         Deduction (Yen)
0 – 1,950,000                         5%
1,950,000 – 3,300,000            10%             97,500
3,300,000 – 6,950,000            20%             427,500
6,950,000 – 9,000,000            23%             636,000
9,000,000 – 18,000,000          33%             1,536,000
Above 18,000,000                  40%             2,796,000

           While similarities between the taxation of companies and individuals do exist in Japan, the above refers largely to companies. Accordingly, outlined below are the basic rules and rates applicable to individuals. Given the complexity of this area, it is necessary to stress the need to seek professional advice. Non-resident taxpayers are taxed only on their Japanese source income. Non-permanent resident taxpayers are taxed on both Japanese source income plus that part of non-Japan source income that is paid in and/or remitted to Japan. A permanent resident taxpayer is taxed on his worldwide income.

Consumption Tax:

             The Liberal Democratic Party government of Masayoshi Ohira had attempted to introduce a consumption tax in 1979. Ohira met a lot of opposition within his own party and gave up on his attempt after his party suffered badly in the 1979 election. Ten years later Noboru Takeshita successfully negotiated with politicians, bureaucrats, business and labor unions to introduce a consumption tax,which was introduced at a rate of 3% consumption tax in 1989.

             In April 1997 under the government of Ryutaro Hashimoto it was increased to 5%. Shortly after the tax was introduced Japan fell into recession,which was blamed by some on the consumption tax increase.

             The Democratic Party of Japan came to power in the August 2009 elections with a promise not to raise the consumption tax for four years. Despite an internal battle that saw former DPJ leader Ichiro Ozawa and many other DPJ diet members vote against the bill and then leave the party, in June 26 2012 the lower house of the Japanese diet passed a bill to double the tax to 10%.The new bill increases the tax to 8% by April 2014 and 10% by October 2015.

Japan Project 4-- Government

     The politics of Japan is conducted in a framework of a parliamentary representative democratic monarchy where the Prime Minister of Japan is the head of government and the head of the Cabinet that directs the executive branch. Legislative power is vested in the Diet, which consists of the House of Representatives and the House of Councillors. Japanese politics encompasses the multiparty system. The judicial power is vested in the Supreme Court and lower courts. In academic studies, Japan is generally considered a constitutional monarchy with a system of civil law.

Emperor of Japan
           The Emperor is the symbol of the state and of the unity of the people.Though the emperor's official status is disputed, on diplomatic occasions the emperor tends to behave as the head of state.He also appoints the Prime Minister and the Chief Justice of the Supreme Court as designated by the Diet and the Cabinet respectively. The Imperial Throne is dynastic and succeeded from father to son.

Diet--the Legislative Branch
            The National Diet, composed of two houses - the House of Representative (lower house, 480 members) and the House of Councilors (upper house 242 members), is the sole law-making organ of the State.  The term of office for the elected member of the upper house is six years, and the term of office for this house is limited to four years.
             Both Houses have the same power with some exceptional cases in which the decision of the House of Representatives precedes that of the House of Councilors.

Cabinet-- the Executive Branch
            The Cabinet, which consists of the Prime Minister and not more than 17 Ministers of State, is collectively responsible to the Diet. If the House of Representatives passes a non-confidence resolution or rejects a confidence resolution the Cabinet shall resign en masse. 
            Prime Minister is designated from among the members of the Diet by a resolution of the Diet and appointed by the Emperor. Prime Minister appoints the Ministers of States and may dismiss them as he chooses. The Prime Minister, representing the Cabinet, submits bills to the Diet, reports to the Diet on general national affairs and foreign relations, and exercises control and supervision over various administrative branches.

Judiciary Branch          
              The Justices of the Supreme Court, except the Chief Justice who is appointed by the Emperor, are appointed by the Cabinet. The Judges of inferior courts are also appointed by the Cabinet but only from a list of persons nominated by the Supreme Court.
        The Japanese constitution, which went into effect on 3 May 1947 includes a bill of rights similar to the United States Bill of Rights, and the Supreme Court has the right of judicial review. 

Major Political Parties
THE LIBERAL DEMOCRATIC PARTY
              A union of centrist and right wing parties created with US support after the second world war, the Liberal Democrats governed Japan almost uninterruptedly from 1955 to 2009, before returning to power in a landslide victory in 2012. Elite bureaucrats collaborated closely with the party and interest groups in drafting and implementing policy. The party lacked a strong, nationwide organization or consistent ideology, but it functioned efficiently as a locus for matching interest group money and votes with bureaucratic power . 
             The LDP traditionally identified itself with a number of general goals: rapid, export-based economic growth; close cooperation with the United States in foreign and defense policies; and several newer issues, such as administrative reform. 

THE DEMOCRATIC PARTY
              The DPJ, Japan's second largest political party, was formed in the late 1990s as a result of the merger of several anti-LDP parties. Its membership covers a broad spectrum of political beliefs, but it is generally perceived as a center-left party.In 2009, it became the first opposition party to beat the Liberal Democrats in an election for the lower House. It promised to cut waste and shift spending priorities “from concrete to people” – meaning fewer dams and highways and more money for social services such as childcare.

Japan project 3

                

             The evolution of inflation,  π(t), and unemployment,  UE(t), in Japan has been modeled. Both variables were represented as linear functions of the change rate of labor force, dLF/LF. These models provide an accurate description of disinflation in the 1990s and a deflationary period in the 2000s.  

             

       In Japan, there exists a statistically reliable (R^2=0.68) Phillips curve, which is characterized by a negative relation between inflation and unemployment and their synchronous evolution:  UE(t) = -0.94π(t) + 0.045. Effectively, growing unemployment has resulted in decreasing inflation since 1982.  

              

             A linear and lagged generalized relationship between inflation, unemployment and labor force has been also obtained for Japan: π(t) = 2.8*dLF(t)/LF(t) + 0.9*UE(t)  - 0.0392.  Labor force projections allow a prediction of inflation and unemployment in Japan: CPI inflation will be negative (between -0.5% and -1% per year) during the next 40 years.  Unemployment will increase from ~4.0% in 2010 to 5.3% in 2050.    

    

           The figure below shows a scatter plot for unemployment (NAC) and CPI inflation in Japan. A linear regression gives a negative slope of -0.94 and constant tern 0.041 for the period between 1982 and 2006. This regression has been calculated with various time shifts between the unemployment and inflation time series.  The best fit (R^2=0.68) was obtained in the case wen the unemployment curve and the inflation curve are not shifted. Before 1982, there is no linear relation between unemployment and inflation where the CPI inflation curve is modified according to the results of the linear regression. 

                Inflation/unemployment scatter plot and linear regression for the period between 1982

and 2006. Neighboring years are connected by a curve. This curve represents the Phillips curve for Japan. R2=0.68. Regression coefficients are -0.94 and 0.041. Therefore, increasing inflationleads to decreasing unemployment and vice versa. Similar link between inflation and

unemployment is observed in Germany.

  

Japan-- inflation

           The inflation rate in Japan was recorded at -0.10 percent in December of 2012.   Historically, from 1958 until 2012, Japan Inflation Rate averaged 3.04 Percent reaching an all time high of 25 Percent in February of 1974 and a record low of -2.52 Percent in October of 2009. In Japan, the most important categories in the consumer price index are Food (25 percent of total weight) and Housing (21 percent). Transportation and communications accounts for 14 percent; Culture and recreation for 11.5 percent; Fuel, light and water charges for 7 percent; Medical care for 4.3 percent; Clothes and footwear for 4 percent. Furniture and household utensils, Education and Miscellaneous goods and services account for the remaining.

 

           According to the chart below, Japan's inflation rate as measured by the consumer price index was generally meandering around the zero percent level.

          In 1990 a stock market bubble burst in Japan. Two years later an even larger real estate bubble burst. The economy was hit by a recession. Huge monetary and fiscal stimuli were implemented, and government indebtedness went through the roof, rising from 60 percent of GDP to as high as 200 percent, where it stands now.

 

      Despite all the money printing and government stimulus going on in Japan for many years, there hasn’t been inflation until now, that is. In general, there are two reasons for Japanese price stability. First, a very high savings rate combined with strong patriotism enabled Japan to internally finance the steeply rising government indebtedness. And, second, domestic private and institutional investors bought nearly all government debt issued during these past 15 years. Hence Japan did not have to compete internationally to raise capital, thus interest rates not only stayed low but fell ever lower.

      

      In 2013, Japan signals a new strategy to boost economy with a 2% inflation target. The goal is to shake the world’s third-largest economy from two of its most unrelenting problems, chronic deflation and a strong currency, which hurts Japan’s exporters by making their products more expensive overseas. But the strategy represents a particular gamble for a nation already with the highest debt burden in the developed world, at 220 percent of the gross domestic product.

Ap Macro Country project 1

       The economy of Japan is the third largest national economy in the world after the United States and the People's Republic of China and is the world's second largest developed economy.
       
         For three decades from 1960, with US military protection, Japan could ignore military spending and instead budgeting on the economy that it experienced rapid economic growth, which was referred to as the Japanese post-war economic miracle. Japan was able to establish and maintain itself as the world's second largest economy from 1978 until 2010, when it was supplanted by the People's Republic of China. By 1990, income per capita in Japan equalled or surpassed that in most countries in the West.
      
       However, in the second half of the 1980s, rising stock and real estate prices caused the Japanese economy to overheat in what was later to be known as the Japanese asset price bubble caused by the policy of low interest rate by Bank of Japan. The economic bubble came to an abrupt end as the Tokyo Stock Exchange crashed in 1990–92 and real estate prices peaked in 1991. Nonetheless, GDP per capita growth from 2001-2010 has still managed to outpace Europe and the United States.

 

         Manufacturing, construction, real estate, services, and communication are Japan's major industries today. Additionally, key industries in Japan's economy are mining, nonferrous metals, petrochemicals, pharmaceuticals, bioindustry, shipbuilding, aerospace, textiles, and processed foods. Agriculture makes up only about two percent of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry is rather small.

 

Exports: Japan's main export goods are cars, electronic devices and computers. Most important trade partners are China and the USA, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany.

Imports: Japan has a surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs and wood. Major supplier is China, followed by the USA, Australia, Saudia Arabia, South Korea, Indonesia and the United Arab Emirates.

  

 

 

 



Response to 'The Economic Impact of the Black Death"

       In the Fourteenth Century, the Black Death spread through Europe and took away the lives of one third of the European population.  Despite its demographic effects, this epidemic also had great socialeconomics impacts on the survivals.
       First of all, the population decline cause the labor supply to decrease. Accroding to the rule deminishing marginal returns, the marginal physical product would increase when the number of workers decreased. Therefore, the wages of workers increased during the Black Death period because in factor markets, the market wage should be equal to the marginal revenue of labor.
      

















Citation:
Routt, David. "The Economic Impact of the Black Death". EH.Net Encyclopedia, edited by Robert Whaples. July 20, 2008. URL http://eh.net/encyclopedia/article/Routt.Black.Death

Response to Chapter 3

            Normally speaking, as one's income increases, one will buy Starbucks coffee rather than Folgers coffee. Therefore Folgers coffee is considered inferior goods and Starbucks coffee is considered normal goods. However, as long as I am concerned, my demand for either Folger coffee or Starbucks coffee won't change as my income increases because I do not drink coffee.
          
       In my opinion, whether a good in inferior or normal depends on individual tastes and preference. For example, spam is normally regarded as an inferior goods because people's demand for it usually decreases if their purchase ability increases. Before coming to American, I never bought spam because Chinese cuisine seldom use it. However, I buy more spam now because spam tastes good and it is easy to cook. Although I don not have a job or salaries, spam is never an inferior goods to me as I actually get more pocket money from my parents after coming to America. 
         
         Another example comes from my parents, who always prefer to drink instant coffee than to drink  Starbucks coffee. When their income increases, they actually buy more instant coffee because they like drinking it. So to my parents, instant coffee, which is cheaper than Starbucks coffee, is not an inferior goods.
             
          I can understand that the definitions of inferior goods and normal goods applies to a majority of people, but it is not always true for everyone since people's tastes vary from each other. So a question raises in my mind: "Why is it necessary to divide the goods between inferior and normal if these two terms are not necessary true for everyone?"