3 things that increase burden on the Rich

The financial burden on wealthy people has been increasing almost unknown widely.

Probably, most of you haven’t recognized or overlooked them since each revision itself has a slight impact on your burden.

But even if you are rich, you can’t ignore them when you think about the total amount you are going to pay additionally.

We know that the financial situation of the Japanese government has been deteriorating each year but it seems that they are trying to take money from people they think is easy to do so.

Let’s take a look at the 3 things that increase your burden.

1.Abolishment of the Child benefit

The Child benefit is a government subsidy in Japan to support a family that raises children until they graduate from junior high school.

Basically, the family gets 15,000 yen monthly until their child becomes 3 years old and 10,000 yen for a child 3 years or older.

But if either a husband or a wife earns more than 9 million yen annual salary (The salary threshold is subject to change according to how many kids you have), the subsidy is 5,000 yen a month.

 A 5,000 yen monthly subsidy is much better than nothing.

But recently, the 5,000 yen child benefit was decided to be abolished in October 2022.

5,000 yen might be a little amount for the rich. But you can receive that amount every month until your child graduates from junior high school.

The total amount for the 15 years is 900,000 yen.

2.Reduction in the “Salary deduction”

The “Salary deduction” is the amount that individuals can deduct from their salary when they calculate their taxable income.

The more you earn, the larger the deductible amount becomes in general.

But there is a cap.

So far, if you earn more than 10 million yen annually, the “Salary deduction” is fixed at 2,200,000 yen.

Even if you earn 100 million yen, the deductible amount is 2,200,000 yen.

But the caps have changed.

If you earn more than 8,500,000 million yen, the “Salary deduction” is fixed at 1,950,000 yen.

On the other hand, the 380,000 yen Basic deduction that everybody can deduct from their taxable income is increased to 480,000 yen.

So if you earn a 10,000,000 yen salary and the tax rate is 33%, the annal net impact is about 50,000 yen.

• Reduction in the “Salary deduction” : 2,200,000 minus 1,950,000 = 250,000 yen (Negative)
• Increase in Basic deduction : 480,000 minus 380,000 = 100,000 yen (Positive)
• 33% tax rate of (250,000 minus 100,000) = about 50,000 yen

3.Insurance premiums that keep going up

Basically, your social insurance premiums which consist of “health insurance” & “Pension insurance” is calculated based on your salary paid from April to June.

If the average salary paid from April to June is 635,000 yen or larger, your insurance payment increases by about 33,000 yen annually.

But in this case, your pension in the future may increase, too.

So it isn’t always a negative impact on your budget.

But it is negative on your current financing.

To conclude;

As you see, the tax and social insurance burden has gradually been increasing especially for wealthy people.

So what do we have to do?

We have to review our payment. If you find some waste, reduce it.

Setting a company and take tax-saving measures is also a good choice.

～The representative tax accountant will always respond responsibly.～