This is not to mention that Japanese taxes are also much higher and stricter - although obviously there are ways to reduce these. And, finally - when you do die - inheritance taxes again are much worse here.
Japanese inheritance taxes are high but income taxes here are so progressive that at lower income levels the population pays much less than they would in most EU countries and most taxes related to investment income or capital gains are set at a relatively low 20% regardless of income (those taxes would be close to 40% for a high income investor living in California, for instance). For most retirees that is unlikely to be a problem.
Other countries offer much better options for tax shielding investments. I confess to knowing next to nothing about the US systems but don't you guys have 401k plans? Here we have miserly NISAs which have low investment limits (1m JPY) and only offer tax-protection for a limited time.
In the UK you can contribute 20k GBP (3.3m JPY) to an ISA every year and have both capital gains and dividends protected from tax for your entire lifetime, not five or ten years.
Other countries offer much better options for tax shielding investments. I confess to knowing next to nothing about the US systems but don't you guys have 401k plans? Here we have miserly NISAs which have low investment limits (1m JPY) and only offer tax-protection for a limited time.
In the UK you can contribute 20k GBP (3.3m JPY) to an ISA every year and have both capital gains and dividends protected from tax for your entire lifetime, not five or ten years.
I agree that Japan's retirement accounts are not as helpful as a 401K but there are two downsides to consider. First, not everyone in the US has access to a 401K (I worked in the US for around 15 years and never had a job that offered a 401K). Second, in retirement a tax advantaged 401K or IRA actually works against you for tax purposes because there are required minimum distributions which are taxed at ordinary income tax rates. Many very aggressive and successful investors in the US find that they are in a higher tax bracket in retirement than during their working years. In contrast to that someone living off investment income in Japan is in that 20.315% tax bracket for dividends and capital gains even if their investment income is enormous. Also for US expats retirement healthcare expenses are much lower in Japan (although those costs are also much lower everywhere else on the planet outside the US).
captainspoke wrote: ↑Mon Jun 27, 2022 10:14 am
Sounds pretty conclusive.
So why is it that you are still in japan...?
Oh, I love living in Japan. I've lived in low-taxation countries likes Hong Kong, medium taxation countries like the UK and one high-tax country (here). Japan has great quality of life for us, but damn it's expensive for everything, even as an owner-occupier with no mortgage.
So even for something produced all over Japan, it is much cheaper to buy in the UK even when the yen is super cheap.... same as fruit.... same as vegetables... why? Tariffs. Japan is forcing consumers of food (everyone) to subsidize the farmers here.
I can’t argue. And that’s not just the end of Monday apathy or half bottle of Shiraz I’ve downed. But seriously. who has got money for domestic rice? They sell that stuff with a pic of mom&dad next to the bags like it belongs on etsy or similar. (I jest of course..)
Glad you’ve found discount fruit! The shape based comedic opportunities must be boundless.
I had hoped the TPP would open up genuine low cost options for staples such a rice, cheese, wine and funyuns.
In the UK there has been pressure the past year for major supermarkets to bring back there own-brand low cost options. They were off the shelf during the pandemic and that caused a nightmare for low income families.
I do get the reason why Japan tries to protect Japanese farmers - the ratio of calories produced domestically to calories consumed is very low and this is a risk for Japan if there is a war in the future.
The trouble is these tariffs have shielded them from competition, let them get lazy and stifled any incentive to modernize or increase productivity. Milk is another example of produce which is several times more expensive here....
I also hoped TPP would help but many industries were excluded and those that were in-scope had comedically long phase-in times - more than a decade for most products I think.
Deep Blue wrote: ↑Mon Jun 27, 2022 11:39 am
I do get the reason why Japan tries to protect Japanese farmers - the ratio of calories produced domestically to calories consumed is very low and this is a risk for Japan if there is a war in the future.
The trouble is these tariffs have shielded them from competition, let them get lazy and stifled any incentive to modernize or increase productivity. Milk is another example of produce which is several times more expensive here....
I also hoped TPP would help but many industries were excluded and those that were in-scope had comedically long phase-in times - more than a decade for most products I think.
I do understand that and sometimes offer (or at least discuss) the same opinons myself.
But while there's been some recent news about onions--and yes, they've shot up in price--we might eat 1-3 onions/week, so not something that's going to destroy the budget. Same for gas--expensive, but I only top up the tank every 4 weeks or so. Actually, with increased US gas prices, and the swing in the yen, some US locations are on now on par with Japan, but with shorter driving distances here, along with less reliance on cars.
I confess I don’t watch Japanese TV so I am unaware of the onion inflation news! I guess that’s why you mentioned onions in particular.
I did see Apple is raising prices massively here after the yen depreciation. iPhones seem to have high market share here (and doubtless Android manufactures have to follow) so there will be a lot of sticker shock around.
Quite happy we just upgraded our phones, wife from an iPhone 7 and me from a Note 8. Got lucky on the timing! Also signed for a new car, I wonder if that’s the next shoe to drop (she chose a VW for some reason).
Imported inflation without an accompanying rise in wages is going to be painful for many.
This is not to mention that Japanese taxes are also much higher and stricter - although obviously there are ways to reduce these. And, finally - when you do die - inheritance taxes again are much worse here.
High taxes (and I agree that Japanese taxes are very high for high earners with little relief in the way of tax breaks or shelters) primarily impact people in accumulation phase and is less of an issue for retirees (in fact Japan taxes are very low for low-earners) making Japan a prettry good place to retire given the social safety net.
Curious about how how you are reducing your taxes ? The juiciest tax dodge (wood-frame rental units overseas) has been closed and I have not found anything remotely comparable that is feasible (and legal) for salaried professionals here.
