Differences Between Japan And Japan

A) Japan differs from Germany in the way it formulates tax policies, this is partly due to their structural setup. Japan is a more pluralist nation while Germany has a mixture system that has bits of pluralist and proportional elements (Budget Processes and Commitment to Fiscal Discipline, 2015). Because these countries are set up differently, their tax policy formation process differs in certain ways. The first key difference is noted in chapter 6 of “Comparing Public Policies”, where Germany is considered to have a budget and tax formulation process that is more centralized than Japan’s pluralist system. In addition to this, the second key difference is how the two countries specifically go about creating tax policies. In Japan, tax policy

This difference is important because the two countries spread their taxes out differently which can help explain certain aspects of the country such as why they have some of the policies they have and how the country operates as a whole. Like most countries, Japan’s income tax rates vary by income. The personal income tax in Japan has 6 brackets ranging from 5% to 40% (Comparing Public Policies, 2011. Ch. 6). Japan has a system of withholding taxes, meaning each month employers withhold part of a citizen’s individual income tax. At the end of a year, Japanese citizens will receive a refund if their employer has taken more than mandatory. In Germany, the income tax also varies by income, but the biggest difference in this area between Germany and Japan is that while Japan’s income tax rate starts at 5%, Germany’s starts at 15% (Fraai, Dorine. 2015). These differences of tax breakdown are significant because each country has a unique structure and therefore relies on different forms of tax revenue to sustain its economy. Corporate tax rates are a hotly debated topic in Japan. Japan boasts the world’s third largest economy, leaving many to argue that in order to maintain this position, corporate tax rates should be slashed. The basic corporate income tax rate is an astounding 30%. Small businesses get a small reduction in their tax rates, paying only 22% on the first eight

In Germany, the structure of their political system and the structure of their society is very centralized. Because of this centralization, most every policy Germany churns out is centralized as well. For example, their tax policy and budget formulation process is centralized because the government that creates these policies is also centralized. This structural setup differs from Japan where they have a more pluralist system, therefore their tax policies tend to contain a more diverse setup. As previously stated, Japan has a low VAT tax. In contrast to Germany, Japan has a low VAT tax due to public opposition. When Japan introduced the VAT tax it was well received by businesses but no so much from the citizens; this mirrors Japan’s pluralist