Corporate tax for local businesses. This is an urgent topic!
I haven't verified the information yet.
Corporate tax is a tax paid by businesses.
The gist of this topic is, will corporate tax be levied to local governments? If it is not, what does it mean for local governments to attract businesses? This issue may be a global issue. I haven't done enough research yet, so I can't say for sure. Also, in the case of large companies with headquarters in urban areas, even if the corporate tax is levied locally, doesn't it seem like the money will be sucked up into urban areas and the capital? It depends on the accounting system of the large company, right?
Well.
First, let's say there's an earthquake in a rural area. Then, if the local government hires a lot of civil engineering workers for reconstruction work, it's expected to generate tax revenue and get the economy going, so it's a reasonable response, right? Doesn't that sound like something that's said in textbooks too?
Huh?
That's strange.
Because in this case, local governments would hire civil engineering workers. The profits of the companies that employ them would go to their headquarters in the city center. Corporation tax would be deducted in the city center where the headquarters is. Is this how it is?
If this is the case, wouldn't money be sucked out of the regions and sent to the city center, to Tokyo?
...Huh.
...Huh?
That's strange.
Umm, I wonder, regardless of the earthquake disaster, where do huge factories in rural areas usually pay their taxes? Are they paid to the local government in that area? Or are they being sucked up to Capital city Tokyo, where the headquarters are located? If they are being sucked up, we can't expect local governments to revitalize the local economy or increase tax revenue. ...Right?
What is going on here? To return to the topic of the earthquake, even if local governments hire civil engineers for reconstruction work, if the money is absorbed by the Tokyo Metropolitan Government headquarters, it will be difficult for them to make special contributions to reconstruction work, right? On top of the earthquake, taxes have been taken away, and they are in ruins, aren't they?
Addendum.
Oh, excuse me! the Capital city Tokyo is also a local government, isn't it? To be precise, in this case, it's national government. Even if a factory is built in a local area, the area doesn't receive any tax from the factory, and only the national government that collects the corporate tax benefits, right?
The main point here is, does the corporate tax go to local governments?
It is possible that there is no system in place for corporate tax to be paid to local governments, and I have not looked into this yet.
If there is no such thing, even if a factory is attracted, it will not revitalize the local government, right?
Local governments are prefectures, cities, towns, and villages. In addition to the national government, this country has organizations called local governments, and prefectural governors are equivalent to state governors in the United States. If prefectures and other such organizations do not collect corporate taxes, the prefecture will not receive any taxes even if a factory is built there, so the prefecture's finances will not improve, right? The region will not make a profit. If both prefectures and cities, towns, and villages do not receive corporate taxes, the local finances will not improve, right?
Well, I'm busy, so I'll look into it another time.
Oh, so this case also exists in Tokyo. The above explanation is also true, right? The head office is in Tokyo, and the branch office is in Shizuoka Prefecture. The branch office's sales are consolidated at the head office in Tokyo. Even if corporate tax is reduced for local governments, the only one that will make a profit is Tokyo, where the Tokyo headquarters is located. That's right, right?
Addendum.
So, for now, there is corporate tax levied on local governments, a tax paid by companies, right? It seems that there is. It seems to be something like corporate inhabitant tax and corporate business tax. For now, that's a relief.
(Prefecture) Corporate tax amount x 1.0%
(City/town) Corporate tax amount x 6.0%
This example is for corporate inhabitant tax. There are other things to pay as well. The amount of corporate tax is multiplied by this ratio to calculate, and this calculation seems to include the corporate inhabitant tax for the time being. It's hard to explain, so it's hard to understand, but for now, it seems that there are things like that.
Now,
However, even with this system, if the accounting is not independent for each factory branch and regional branch, the siphoning to the Tokyo headquarters will likely occur. Accounting should be independent and the tax amount should be calculated from there. If this is not done, profits will be unclear. Is there something wrong here? ... Hmm ... I'm still investigating.
When Japanese companies expanded into the US, they said that if they didn't pay taxes to the US, it would be a problem, so if they want to do business in the US, they want the US to pay taxes... this makes sense, right? It makes sense. It makes sense. If we don't do this for each region in the country, it won't lead to regional revitalization, so we have to do it, but is there a system in place for that? That's the topic of discussion here. For the time being, it seems that there is one in our country...
In this world, business owner people want to return home in glory, but there's no system in place to make that happen?! What is that!? It's disappointing. ...This is going to be a problem, isn't it?
Even so, it's so low...Currently, the corporate tax rate is 23.2%, but if you consider that 23.2% to be 100%, then it's only 6% or 1% of that, right?
In the example I saw, it was 1.3 billion yen, and at 1%, the prefecture got 13 million yen. If you pay the annual salary of 2-3 employees, it disappears in a flash. That's too low, isn't it? Even if we lower the corporate tax, it would be better to raise this... corporate inhabitant tax... Ah, no, I haven't looked into the corporate business tax in detail yet...