Incentive to Finance under the Shoup Corporate Income Tax Concept—Focus on Shoup Semi-Imputation Credit Method

Reform of the Japanese tax system was undertaken after the second World War and was greatly influenced by Carl Shoup, then Professor at Columbia University. Shoup’s recommendations were made during a unique historical period which allowed for an experimental designing of tax reform in Japan to occur under occupation. In this article we review and criticize Shoup’s recommendations and explain the problems inherent in their implementation. Cultural transference problems such as attempted imputation of corporate tax to individual income tax based on the theory of net asset increases tax are discussed. Comparisons are also made with French and German imputation credit methods.