TAXATION, ECONOMIC RATE OF RETURN AND INVESTMENT - A COMPARISON OF UNITED-STATES AND JAPANESE MANUFACTURING-INDUSTRIES

When interacted with inflation, corporate income tax has widely been r ecognized to increase taxable income. However, whether inflation has m ade the taxable income steadfastly exceed the economic one is not cert ain. This paper shows empirically while this has been the case in the U.S. manufacturing industry, their Japanese counterpart has been able to gain from inflation. The investment performance of the two nations' manufacturing industries is also examined and is shown to be explaine d well by the after-tax economic rates of return.