CORPORATE INCOME TAX STRUCTURES.   Term Paper ID:29081 Click to get this paper

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Paper Abstract: Compares the U.S. and Japan. Importance of corporate income taxation in the total tax structure of both countries. Discusses various approaches for comparing the role and importance of corporate income taxation. How the two countries differ in determining taxable income. Concludes that corporate income tax collections play a larger role in Japan's total tax structure than in the U.S. Paper Introduction: COMPARING AND CONTRASTING THE CORPORATE INCOME TAX STRUCTURES IN JAPAN AND THE UNITED STATES Introduction This research compares and contrasts the corporate income tax structures in Japan and the United States. The following section discusses, compares, and contrasts the role and importance of corporate income taxation in the total tax structure of the two countries. Following consideration of the role of corporate income taxation in the total tax structure, specific aspects of the corporate income tax structure in the two countries are compared and contrasted. Comparing and Contrasting the Role and Importance of Corporate Income Taxation in the Total Tax Structure in Japan and the United States Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Subsidiariesof foreign corporations in Japan are taxed only on Japanese-source income(Ernst & Young, 2 2). Although subsidiary-level governmentaltaxation varies widely within each country, the variation in the corporateincome tax burden in the two countries remains approximately five-percentfavoring the United States corporations. Japan'sproportion is the highest among OECD member countries (Hagemann, Jones, &Montador, 1998). When corporate incomes taxes at all levels of government areconsidered, the difference in the corporate tax burden between Japan andthe United States shrinks to just two percent (considering the highestlevel of state corporate income taxes). OECD Observer. A second approach for comparing the role and importance of corporateincome taxation in the total tax structure in different countries is tostate corporate income tax collections as a proportion of total income taxcollections. The truth about tax burdens. In contrast, Japan provides no comparable incentive or relief. (1998). Further, both the lowerterminus of the corporate income tax range and the higher terminus in theUnited States are outside the range of corporate income taxation in Japan(The World Bank Group, 2 2). As a percentagedifference, however, 29 percent is 2 .8 percent greater than 24 percent.Corporate income tax collections as a proportion of total collections are4.6 percent higher in Japan than in the United States - the differencebetween 12.9 percent and 8.3 percent. Corporate incometax collections, thus, fulfill a larger role in Japan than in the UnitedStates. (2 2b, June 6). Retrieved from the Internet 2 2- 7-28 at: http://www.oecdinwashington.orgWorld Bank Group. (2 2). Summary and Conclusion This research compared and contrasted the corporate income taxstructures in Japan and the United States. Corporations in the UnitedStates on average therefore, are able to (1) reinvest a greater proportionof earnings, (2) provide a higher level of dividends, or (3) a combinationof the two than is possible on average among Japanese corporations. (2 2). The highest effective tax rateon corporate income in the United States (including the mean federal leveltax and the highest state level tax) is 4 percent. Atthe corporate level, tax applied to taxable income is almost 87 percenthigher in Japan than in the United States. Retrieved from the Internet 2 2- 7-28 at: http://www.economist.comErnst & Young. The total tax burden in Japan is approximated five-percenthigher than it is in the United States - the difference betweenapproximately 24 percent and approximately 29 percent. OECD Economic Studies (1 ), 211-222.Heady, C. Economist.com. Retrieved from the Internet 2 2- 7-28 at: http://www.us.kpmg.com/ microsite/Global_Tax/TaxFactsTax rates are falling. The municipal and prefecture taxes on corporateincome in Japan vary but generally not to the extent that corporate incomestaxes vary by state in the United States. Doing business in the United States. The Economist [London] reportsthat the effective standard corporate income tax rate in Japan is 4 .9percent (Economist Intelligence Unit, 2 2). New York: Ernst & Young.Ernst & Young. Corporate income tax. Similar provisions apply in the United States.Through a tax treaty, corporations based in each country are allowed todeduct corporate income taxes paid by subsidiaries in the other country(Ernst & Young, 2 2b). OECD in Washington. The research found thatcorporate income tax collections play a large role in to total taxstructure in Japan than in the United States. Comparing and contrasting the corporate income tax structures in japan and the united states Introduction This research compares and contrasts the corporate income taxstructures in Japan and the United States. Between 1986 and 2 , corporate income tax rate in the United Statesfell 11 percent. The variation in subsidiarygovernment taxes on corporate income in both Japan and the United States,however, lead to a situation where the mean effective income tax oncorporations remains lower in the United States - 34.5 percent - than inJapan - 4 .9 percent ((Economist Intelligence Unit, 2 2; (EconomistIntelligence Unit, 2 2b). In Japan, total corporate income collections account for 12.9percent of total income tax collections. (2 2, July 11). Corporate income tax rates in the United States range from 15 percentto 35 percent. The average for OECD member states in 8.8 percent.At the same time - 2 , the total tax burden in the United Statesapproximated 24 percent, while the total tax burden in Japan approximated29 percent (Heady, 2 2). In Japan, the corporate income tax rates range from 25percent to 34.5 percent. Thus, while the maximum potential level ofcorporate income tax is higher in the United States than in Japan, theprobability is that the mean level of corporate income taxation will behigher in Japan than in the United States, assuming no major differences ineconomic conditions in the two countries. ReferencesEconomist Intelligence Unit. In contrast, total corporateincome collections account for 8.3 percent of total income tax collectionsin the United States. (2 2, March 1). Corporate tax survey. P., Jones, B. Using the proportion of GDP approach to comparing and contrastingcorporate income taxation across countries, Japan relies to a much greaterextent than does the United States on corporate income tax collections. Subsidiary governments in both Japan and the United States also taxcorporations in income. Doing business in Japan. R., Montador, R. Retrieved from the Internet 2 2- 7-28 at: http://www.oecdobserver.orgKPMG. Economist.com. Comparing and Contrasting the Role and Importance of Corporate Income Taxation in the Total Tax Structure in Japan and the United States One approach to comparing the role and importance of corporate incometaxation in the total tax structure in different countries is to statetotal corporate income tax collections as a proportion of gross domesticproduct (GDP). Comparing and Contrasting Specific Aspects of the Corporate Income Tax Structure in Japan and the USA With respect to determining taxable income for corporations, theUnited States exempts to first US$5 , in profits from higher rates ofcorporate income taxation, limiting the tax on such taxable income to 15percent. The preceding information illustrated the greater dependency in Japanthan in the United States of a reliance on corporate income taxcollections. Followingconsideration of the role of corporate income taxation in the total taxstructure, specific aspects of the corporate income tax structure in thetwo countries are compared and contrasted. The effective corporateincome tax rate in the United States is 34.5 percent (EconomistIntelligence Unit, 2 2b). (2 2, January). Over the same period, corporate income tax rates in Japanfell by 16 percent ("Tax Rates Are Falling", 2 1). Country Briefing: Japan. Country Briefing: United States. New York: Ernst & Young.Hagemann, R. This difference, on average,provides an advantage to American corporations in the ability to reinvestprofits and reward shareholders. Corporate income taxation in both countries is a combination ofnational-level government taxation and subsidiary-level governmenttaxation. The standard corporate income tax rate in Japan is 3 percent -approximately the midpoint in the range. When viewed in this context, total corporate income taxcollections in Japan account for 4.3 percent of GDP and 2.3 percent in theUnited States. Retrieved from the Internet 2 2- 7-28 at: http://www.worldbank.org (2 2b). (2 1, April). Corporations based in Japan are taxed on both the income earned inJapan and the income earned in operations in other countries. Through this structuring of the income taxation of corporations,the United States (1) provides incentives for many new firms and smallfirms, while (2) providing some relief to firms in periods of economicdecline. The following sectiondiscusses, compares, and contrasts the role and importance of corporateincome taxation in the total tax structure of the two countries. As a percentage difference, however,12.9 percent is 55.4 percent greater than 8.3 percent. The range of corporate income tax rates is muchnarrower in Japan than in the United States. The comparable taxlevel in Japan is 42 percent (KPMG, 2 2). B. Considering only national level taxation, the corporate incometax burden in the United States is approximately five-percent lower in theUnited States than in Japan. Japan does not allow such an exemption (The World Bank Group2 2). Retrieved from the Internet 2 2- 7-28 at: http://www.economist.comEconomist Intelligence Unit. The Organization for Economic Cooperation and Development(OECD) average is 2.6 percent with a low of 1.4 percent in German. Tax reform in OECD countries: Motives, constraints, and practice. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.