October 16, 2021

Akahata editorial (excerpts)

Prime Minister Kishida Fumio has shelved revising preferential tax rates for financial instruments, one of his promises during the ruling Liberal Democratic Party presidential election. It has long been said that the tax rate for stock sales is extremely low. If PM Kishida really seeks to achieve a more equitable cycle of growth and distribution and to pursue a new form of capitalism, he should take immediate action to correct the current unfair tax system.

As income taxes are supposedly progressive taxes, higher tax rates are applied to high income earners. However, actually, the tax burden rate for high income households goes down after their annual income exceeds 100 million yen. A major reason for this is that the low tax rate for stock sales reduces the tax burden on the rich who earn profits from selling stocks.

The rate for income tax is 55% at maximum while that for capital gains is set at 20%. The U.S. and European nations levy tax on capital gains at the rate of around 30%. The U.S. Biden administration proposed to increase the federal tax rate applied on stock sales by 5%.

The Japanese Communist Party in its proposal on economic policies demanded that the tax rate for huge profits in stock sales be increased to 30%, the same level as the U.S. and European nations. In addition, regarding stock dividends, except for small dividends, the JCP demanded that such income be taxed together with other taxable income at a progressive rate.

Opposition parties, including the JCP, in their common policies call for lowering the consumption tax rate and imposing a heavier tax burden on the wealthy. In order to realize a fair share of tax burdens, the realization of a change in government through the united efforts of opposition parties and concerned citizens is essential.