There are numerous kinds of tax categories. In the case of private individuals, firstly income tax is imposed on their revenue (income), for many, this is their salary. Secondly, residency tax is paid to the municipalities they live in. If you are a company employee, these taxes are subtracted from your salary by your company, which will pay them on to the tax office on your behalf. In addition, consumer tax is added when you purchase any product regardless of the amount. Companies pay corporate tax yearly. A progressive tax system is applied to income tax, corporate tax and residency tax. In other words, the more you earn, the higher your tax rate. When a corporation expands into foreign territories, if the conditions are similar, a country or region with a cheaper taxrate will be chosen. Japan’s tax rate is about average for an advanced country. Many global corporations use countries or regions called “tax havens” that impose very low tax rates. However, as the process of globalization advances, nations compete to lower their taxes leading to the construction of a system in which the rich become ever richer. The philosophy behind taxes and nations is that more taxes are collected from the rich in order to redistribute wealth to the poor. During the era in Japan when economic growth shot up, the average salary of leading company directors was about eight times the average salary of employees. During that period in Japan, the government imposed an exceptionally high progressive rate of 93% on top earners, balancing out inequalities in income among citizens. As a result, by the early 1990s, 90% of people stated they belonged to the middle classes. The government redistributes tax money collected nationally to local municipalities as grants. However, as the gap between big cities and regions became wider, many municipalities were lacking funds. As one of the policies aimed at readressing this problem, the hometown tax system was designed to pass tax money onto rural areas, but it has been called into question, with some asking whether it is right to pay tax to other areas, while receiving services from the municipality you live in. Furthermore, some people see these subsidies as a way to impose central policies on rural areas. It could be said that the fairness of a tax system depends on the government after all, or the ability of its politicians, or of the citizens that elect these politicians.