Japan's Tax Cuts Don't Go Far Enough

The avoidance of taxes, John Maynard Keynes wrote, is the only intellectual pursuit that still carries any reward. Don't executives in Japan know it: Even with national debt skyrocketing, more than 70 percent of companies here still pay no corporate taxes.

It makes one wonder what Prime Minister Shinzo Abe is thinking as he promises to slash the roughly 35 percent corporate tax rate. Granted, Japan's rate is unreasonably high: China's is 25 percent, while Singapore (17 percent) and Hong Kong (16.5 percent) are in a completely different league. The government hopes that lopping at least 3.3 percentage points off corporate levies by next year will encourage Japanese executives to increase investment and thereby boost growth. Investors seem enthusiastic. Abe's pledge Wednesday to expedite the cuts ignited the biggest Nikkei rally since 2008.