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Japanese PM Shigeru Ishiba reportedly preparing to resign by end of August

Japanese PM Shigeru Ishiba reportedly preparing to resign by end of August

Yahoo2 days ago
Japanese prime minister Shigeru Ishiba is preparing to step down by the end of August, according to local media reports, following a significant electoral defeat and the conclusion of a high-stakes trade agreement with the United States.
Mr Ishiba, who has faced mounting criticism from within his Liberal Democratic Party (LDP) after his coalition lost its majority in Sunday's upper house election, has reportedly informed close aides of his intention to resign.
Japan's Yomiuri newspaper reported that Mr Ishiba told his inner circle on Tuesday that he would explain how he planned to take responsibility for the election results once trade negotiations with the US had been resolved.
The Mainichi and the Sankei newspapers also reported that his formal announcement is expected next month, once key national events conclude.
On Wednesday, US president Donald Trump wrote on his Truth Social platform that he had finalised a 'massive' trade deal with Japan involving $550bn in Japanese investments into the US economy. The agreement also includes a reduction of tariffs on Japanese goods from a proposed 25 per cent to 15 per cent.
"This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,' he wrote on Truth Social.
Mr Ishiba responded cautiously when asked about the impact of the deal on his political future. 'I can't say until I scrutinise the outcome of the agreement,' he told reporters, adding that he intended to speak with Mr Trump once he had been briefed by Japan's chief trade negotiator, Ryosei Akazawa.
Auto exports, which represent more than a quarter of Japan's total exports to the US, will also see reduced tariffs under the agreement, Mr Ishiba noted, calling the 15 per cent rate 'the lowest figure among countries that have a trade surplus with the US'.
Despite widespread calls for him to step down, the prime minister had argued that it would be irresponsible to vacate his position amid ongoing economic challenges. 'I will stay in office and do everything in my power to chart a path toward resolving these challenges,' Mr Ishiba said in a news conference on Monday.
He is expected to meet senior LDP figures and three former prime ministers later on Wednesday to discuss the implications of the election results and his likely resignation.
Once Mr Ishiba formally steps aside, the ruling party must organise a leadership election to select his successor. However, with the LDP-Komeito coalition no longer holding a majority in either house of parliament, the new leader may face difficulty securing the required support in a parliamentary vote to become prime minister.
August is traditionally a politically significant month in Japan. This year, it includes commemorations of the atomic bombings of Hiroshima and Nagasaki, the anniversary of the end of World War II on 15 August, and the Tokyo-hosted international conference on African development from 20 to 22 August. Sources suggest Mr Ishiba is likely to resign only after these events have concluded.
Meanwhile, Mr Ishiba's approval ratings have dropped sharply in recent days, with a major national poll showing support for his administration falling to just above 20 per cent – a threshold often considered unsustainable for a sitting government.
'What this means is that we're sort of entering a period of speculation as to who's going to be the next leader,' William Chou, deputy director of the Japan Chair at the Hudson Institute, told Bloomberg. 'Right now it's just a lot of speculation.'
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Morning Bid: Fizzy market week turns flat
Morning Bid: Fizzy market week turns flat

Yahoo

time26 minutes ago

  • Yahoo

Morning Bid: Fizzy market week turns flat

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TSX futures slip as investors await tariff deadline, trade updates
TSX futures slip as investors await tariff deadline, trade updates

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TSX futures slip as investors await tariff deadline, trade updates

(Reuters) -Futures tied to Canada's main stock index slipped on Friday, mirroring global markets, as investors awaited trade developments ahead of President Donald Trump's tariff deadline next week. Futures on the S&P/TSX index were down 0.2% at 1,625.4 points by 06:55 a.m. ET (1055 GMT). Canada' main stock index edged lower on Thursday but was holding close to a record high. Global equities fell on Friday as investors booked profits ahead of a critical week that includes the August 1 tariff deadline. Markets are watching closely, hoping the United States will hold off on imposing steep import levies. This week, sentiment was buoyed by U.S. trade agreements with Japan, Indonesia, and the Philippines. Meanwhile, negotiations continue with the European Union and South Korea, where hopes for additional deals remain. In commodities, gold prices slipped and copper eased, and oil prices were stable on Friday. Looking ahead, investor focus will shift to several key events next week, including policy decisions from the Bank of Canada and the U.S. Federal Reserve, as well as earnings reports from several of the so-called 'Magnificent Seven' tech companies. FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report [.TO] Canadian dollar and bonds report [CAD/] [CA/] Reuters global stocks poll for Canada Canadian markets directory ($1= C${CAD=;PRIMACT_1})

Trump just floated a tax idea that would hugely benefit California homeowners
Trump just floated a tax idea that would hugely benefit California homeowners

San Francisco Chronicle​

time28 minutes ago

  • San Francisco Chronicle​

Trump just floated a tax idea that would hugely benefit California homeowners

President Donald Trump just floated an idea that could benefit more homeowners in California than in any other state: eliminating the capital gains tax on the sale of a primary home. Under current law, homeowners who sell their primary home pay nothing on their first $250,000 (single filers) or $500,000 (married filing jointly) in profits. Anything over that is taxed as a capital gain. Those limits have not changed since the law that created them took effect in May 1997. Had they increased along with the Consumer Price Index, they would be double that now. California has, by far, more homes exceeding the current limits than any other state. Between 2017 and 2023, California accounted for 37% of all sales nationwide that had gross capital gains exceeding $500,000, even though it made up only 10% of all home sales, according to a study last year by Cotality. Rather than sell and pay capital gains tax – which could be as much as 33% in federal and California taxes combined – many long-term homeowners plan to stay put until they die, even if their home no longer suits them. Upon their death, all of the appreciation that occurred during their lifetime will be tax-free, thanks to a tax benefit known as the 'step-up in basis." Real estate agents say this 'lock-in' effect is slowing home sales and driving up prices in high-cost markets. 'We have had the most appreciation in the nation coupled with the highest capital gains rate in the nation when you count state and federal,' said Silicon Valley Realtor Ken DeLeon. 'I have a client, he has Alzheimer's, he should really be in a care home, but he has a highly appreciated home and he's choosing not to sell.' He noted that In Santa Clara County, single-family home sales fell fairly steadily from 24,174 in 2001 to 10,102 in 2024. In San Mateo County, they fell from 8,878 to 4,471, DeLeon said. About two weeks ago, Rep. Marjorie Taylor Greene, R-Ga., introduced a bill, the No Tax on Home Sales Act, that would eliminate capital gains taxes on primary home sales. During a press conference Tuesday, Trump was asked, 'How important is it we have no tax on home sales, capital gains to unleash the housing market in this country?' His response: 'Well, we're thinking about that. But it would also unleash it just by lowering the interest rates.' Congress would have to approve any change or elimination of the capital gains tax on homes. If it did, the California Legislature would have to decide whether or not to conform to the new federal law for state taxes. Most federal legislators from California contacted for this article – including Sens. Alex Padilla and Adam Schiff and Rep. Nancy Pelosi – did not respond or declined to comment on Trump's idea until he puts forth a proposal. But a couple did acknowledge the need for change. Rep. Mike Thompson, D-Napa, said via email that there are areas of the state and nation where rising property values 'are making the capital gains tax a barrier for many empty nesters and retirees seeking to sell their homes or downsize. This has worsened California's housing crisis, leaving too many houses off the market … As Ranking Member of the (House) Tax Subcommittee, I support solutions that would address these issues, including raising the current exemption for the capital gains tax." Considering how many tax breaks Congress just granted in the One Big Beautiful Bill Act, it's not clear how much support there is for legislation that would mainly benefit wealthy homeowners. Double the exemption? A more modest bill, the ' More Homes on the Market Act,' would double the existing exemptions to $500,000 for singles and $1 million for couples and index them to inflation. Rep. Jimmy Panetta, D-Santa Cruz, reintroduced the bill in February after it died in 2023, despite having broad bipartisan support. In an emailed statement, Panetta said, 'It's a good thing that the President is finally acknowledging the seriousness of the affordable housing issue…' and that he is 'willing to work with anyone on solutions for my constituents…especially when it comes to our bipartisan bill.' Asked whether he favors eliminating the capital gains tax on homes, his office said Panetta would first have to review any such legislation and the analysis. Doubling the exemption would wipe out the tax for most homeowners, but 'in the Bay Area and California, you would need to quadruple it, to $2 million,' DeLeon said. Since May 1997, the median price of a single-family home nationwide has risen by almost 250% to $441,500, according to National Association of Realtors data. But in California, it shot up 386% to almost $900,000, and in San Francisco County, it soared about 500% to $1.75 million, based on California Association of Realtors data. The old rules Freeing up inventory was also one of the main reasons behind the tax law change in 1997. Under the old law, when sellers made a profit on their primary residence, the tax was deferred (not forgiven) if they purchased a replacement home within a specified time and the new house cost at least as much as the sales price on the old home. A homeowner could continue rolling the untaxed profit from one house to another, as long as they kept buying more expensive homes. If and when they sold a home, all of the accumulated untaxed gains would become taxable. If they left it to their heirs, the gains up until the owner's death generally would escape capital gains tax because of the step-up in basis. The old law also let people 55 or older sell their primary home and exclude up to $125,000 (married or single) in accumulated profits, but only once in a lifetime. As a result, homeowners had to keep meticulous recordkeeping from every house they owned. Some lawmakers and academics believed the law created distortions in the market, such as discouraging homeowners from downsizing, moving into rental housing or from higher-cost to lower-cost markets as their circumstances changed. The new rules The Taxpayer Relief Act of 1997 was intended to reduce these distortions, stimulate sales, simplify recordkeeping and eliminate capital gains taxes for almost all homeowners. It exempted the first $250,000/$500,000 in profits from capital gains tax, whether or not the seller bought a new house. Profit is what's left after you subtract what you paid for the house and eligible improvements from your sales price minus commissions and other selling expenses. Taxpayers with gains under the limits generally do not have to report the sale on their tax return. Any profit over the exemption is taxed as a capital gain. The federal rate on long-term capital gains is 0%, 15% or 20% depending on income. That's lower than the rate on 'ordinary income,' such as from a job or self-employment. A large taxable gain from the sale of a home could also trigger an additional 3.8% 'net investment income tax.' A bulge in income can also force some seniors to pay substantially more for Medicare for one year. California also excludes the first $250,000/$500,000 from the sale of a primary home, but it taxes capital gains just like ordinary income, at rates up to 13.3%. Homeowners can use this exemption as often as every two years, as long as each home has been their primary residence for at least two out of five years before the sale. What happened after 1997? Initially, the new law did eliminate tax for the vast majority of homeowners, but as home prices soared, so did the number who owed tax. Between 2000 and 2003 – a few years after the rule change – only about 38,000 home sales per year nationwide, or 1.3% of all existing home sales, had gross capital gains (excluding homeowner improvements) that exceeded $500,000, according to Cotality. By the end of 2023, almost 230,000 homes or 7.9% of all home sales nationwide – and almost 29% in California – were over the limit. A study commissioned by the National Association of Realtors found that 34% of homeowners today could already exceed $250,000 in capital gains and 10% have potential gains above $500,000. Those numbers could be 56% and 23%, respectively, by 2030 and nearly 70% and 38% by 2035. 'These outdated (exemption) thresholds are already distorting the housing market and locking up inventory, and it is getting worse every year,' the association wrote. What research says Several academic studies found that the tax law change in 1997 did increase housing turnover, and may have contributed to the sharp runup in home prices from the early 2000s until 2008, when the bubble burst. The Taxpayer Relief Act of 1997 'played a significant role in facilitating the boom in the residential real estate market that began shortly after its enactment,' Pete H. Oppenheimer, then a professor at the University of North Georgia, wrote in a 2014 paper. It created an opportunity for homeowners to receive tax free income when they resold their principal residences, which made homeownership more attractive and caused the real estate market to 'expand in volume and price,' he added. It also helped 'real estate investors and professionals to achieve tax free income … by converting rental property into a personal residence.' A Federal Reserve study published in 2008 concluded that the 1997 Act 'reversed the lock-in effect of capital gains taxes on houses with low and moderate capital gains.' However, it 'may have generated an unintended lock-in effect on houses with capital gains over the maximum exclusion amount.' Its author Hui Shan found that the short-term effect was 'much larger' than the long-term effect. A 2011 paper by Andrea Heuson and Gary Painter also found that housing turnover 'increased significantly' after 1997. 'The surprising result is how broad based the change in trading behavior is, appearing across all age ranges and impacting both trading up and trading down,' they wrote. Based on his past research, Painter predicted that eliminating the tax on home sales would increase sales. When he left his job at the University of Southern California to teach at the University of Cincinnati, Painter kept his home near Long Beach and rented it out because he didn't want to pay capital gains tax, but also in case he wanted to return to California one day. It's not just capital gains tax Capital gains are not the only culprit locking up inventory. Many homeowners with mortgages around 3% are reluctant to move, now that rates are hovering around 6% to 7%. That is the 'big 1,000-pound gorilla that has reduced mobility," Painter said. And in California, many sellers would face a big increase in their property tax assessment if they sold a long-held home and bought another. Proposition 19, passed by voters in 2020, was supposed to boost inventory by making it easier for people 55 or older to transfer their assessment from their current home to a new one, thus avoiding or reducing a property-tax increase. It also made it harder for children to keep a parent's low property tax base on an inherited home. It appears that more Bay Area seniors did move after Prop. 19 took effect, at least in the first few years. But results varied by county and the effects wore off over time. In Contra Costa, requests by seniors for Prop. 19 transfers went from around 200 per year before 2020 to about 1,000 a year after two years, but since then has tapered off to around 600 a year, said Gus Kramer, the county's assessor. In Santa Clara County, Prop. 19 'has been a lot less successful than anticipated. The biggest negative by far is capital gains,' DeLeon said. Unintended consequences If Congress eliminated capital gains tax on homes, Painter believes more people would move out of California. For people contemplating a move, losing their low property-tax base 'is not an issue, but (capital gains) taxes are. This would be an opportunity to cash in on their equity,' he said. And instead of making homes more affordable, it could increase prices. 'More generous tax treatment of homes could bid up home prices on the demand side, exacerbating concerns about housing affordability,' Joseph Rosenberg , a senior fellow with the Urban-Brookings Tax Policy Center, said via email. San Francisco Chief Economist Ted Egan concurs. 'The expectation of reduced taxes upon sale would likely result in modest upward pressure on housing prices in places, like San Francisco, where profits on home sales often exceed the threshold,' he said via email. 'This in turn would lead to a modest increase in property taxes.'

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