EXCLUSIVE: Japan to Increase Income Tax Burden on Superrich

Tokyo, Dec. 10 (Jiji Press)–Japan’s government and ruling parties are considering increasing the income tax burden on ultrarich individuals, Jiji Press learned Wednesday. Specifically, the gross annual income levels subject to additional income tax will be lowered to “over 600 million yen” from the current “over 3 billion yen,” and the tax rate for the extra levy will be raised to 30 pct from 22.5 pct at present, according to the plan. The government and the coalition of the ruling Liberal Democratic Party and its partner, the Japan Innovation Party, also known as Nippon Ishin no Kai, aim to apply the revised rules starting with income earned in 2027, informed sources said. The plan, to be included in the fiscal 2026 tax system overhaul package, is designed to rectify a situation known as the “100-million-yen barrier,” in which the income tax burden rate begins to drop when annual income exceeds 100 million yen. The tax rate for wage income increases in stages as a person’s income rises, with the maximum rate, including resident tax, standing at 55 pct. Meanwhile, the tax rate on financial income, such as profits from stock sales, is set at a uniform 20 pct, so the income tax burden rate falls for those making large financial gains. According to the National Tax Agency, the maximum income tax burden rate is 25.9 pct, for those with annual income of 50 million yen to 100 million yen. It stands at 16.2 pct for those earning more than 10 billion yen. Under the current system, a tax rate of 22.5 pct is applied to the amount equivalent to the gross income minus a special deduction of 330 million yen. If the sum calculated in this way exceeds the normal income tax amount, the difference will be collected as additional income tax. Under the plan envisaged by the government and the ruling bloc, the special deduction will be lowered to 165 million yen while the additional income tax rate will be raised to 30 pct. If the gross annual income threshold for the additional income tax is lowered to over 600 million yen from over 3 billion yen at present, the number of people subject to the extra income tax would likely increase to about 2,000 from 200-300 at present. When the country’s six ruling and opposition parties agreed last month to scrap the provisional surcharges on the gasoline tax and the gas oil delivery tax, they confirmed that the resulting annual tax revenue drop of about 1.5 trillion yen will be covered with a hike in the tax burdens on ultrarich individuals. END [Copyright The Jiji Press, Ltd.]