| Budget Amount *help |
¥1,500,000 (Direct Cost: ¥1,500,000)
Fiscal Year 1990: ¥600,000 (Direct Cost: ¥600,000)
Fiscal Year 1989: ¥900,000 (Direct Cost: ¥900,000)
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| Research Abstract |
The purpose of this study is to investigate empirically the effects of taxation on foreign direct investments among Japan, the United States, Taiwan, and Korea.
This study had been conducted in two years. In the first year we planned to capture the information on international aspects of tax system and to gather data on international capital movements among these countries along with surveying existing literature. Then, in the second year, empirical study on the effects of taxation on foreign direct investments was planned. But we had to restricted ourselves to the study on the direct investments between Japan and the U. S. because of poor availability of reliable data for Taiwan and Korea.
It has been claimed in Japan that the corporate tax burden has been heavier than in the U. S., and it might cause capital to outflow from Japan. To examine this claim, we estimated average effective tax rates on capital income and rates of return in both countries, and found that Japanese effective ta
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x rate had been lower than U. S. rates before mid 70's, but in 80's Japanese rate has been higher. The difference became narrower by recent tax reform in both countries, but there still remain about 15 Percent points difference.
We then investigate the relationship between Japanese foreign direct investment to U. S. and tax system. We made regression analysis using our own estimates of average as well as marginal effective tax rates and various rates of return, but tax parameters are not significant statistically in explaining recent increase in Japanese direct investment. This result may imply that Japanese firms put more importance on other factors such as yen-dollar rate or restrictions on export from Japan in deciding direct investment, but it may reflect that most of Japanese direct investment are new investment. Theoretically, tax parameters does not affect the decision on new investment but the decision whether to reinvest return form direct investment or to repatriate it to home country. Therefore to examine the effects of taxation on Japanese direct investment, we need to accumulate data in the future and to extend time horizon. Less
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