Eighty years ago next month, on 12 November 1946, Japan promulgated the Property Tax Law, Law No. 52 of 1946. It was a one-time tax on net wealth, with rates that climbed in 14 steps from 25% to 90%. Nothing was due on the first ¥100,000, so most Japanese households owed nothing. The richest families, the owners of the zaibatsu conglomerates, lost most of what they declared.
Today’s arguments about wealth taxes are about rates of 1% to 5%. Japan in 1946 is the extreme case: a capital levy imposed once, and hard, by a defeated country under military occupation.
A snapshot at midnight
The tax looked at everything a person owned at one moment: 00:00 on 3 March 1946. Two weeks earlier, on 17 February, emergency decrees had frozen bank deposits, forced old banknotes into accounts for exchange into new yen, and ordered a survey of private property. A 2016 paper by the tax scholar Kikuya Masato, citing the Finance Ministry’s own history, describes the freeze as partly a preparation for the levy.
The main rules, from the text of the law:
- Who paid. Residents of Japan, and non-residents on property they held in Japan.
- Households, not individuals. The wealth of family members living together was added up to test the threshold, and the tax was then shared among them in proportion to their holdings.
- Exemption. No tax was due if taxable value was ¥100,000 or less, after small deductions, such as ¥5,000 for war-damage victims and repatriates.
- Rates. Fourteen bands, each applied only to its own slice: 25% on the slice from ¥100,000 to ¥110,000, rising to 50% above ¥170,000, 70% above ¥1 million and 90% on everything above ¥15 million.
A note on the lowest rate. Steven Ericson’s 2021 study, the main English-language source on the zaibatsu families’ losses, gives 10% for the first slice. The Japanese text of Article 23 says 25% (百分の二十五), and so do the English translation and the National Tax Agency’s own history pages. We use 25%.
Paying with land and shares
Few rich families held that much cash, and the law offered several ways to pay. Article 55 allowed payment from the frozen deposits. Article 56 allowed payment in kind for any amount that was hard to pay in money. Article 57 allowed payment to be deferred, usually for up to a year, against security. In practice, Ericson writes, families paid with cash, bonds, shares and real estate.
Even the emperor paid. According to Kikuya’s paper, Emperor Shōwa was made liable at the occupation’s wish and paid the largest bill of anyone: about ¥3.3 billion on property valued at ¥3.7 billion, mostly in land rather than cash.
Why: debt, inflation and the zaibatsu
The Ministry of Finance proposed the levy, the Diet passed it in October 1946, and it became law on 12 November. Its official purpose, in Ericson’s account, was to raise money to pay off the mass of government bonds issued during the war. The National Tax Agency’s history adds the fight against inflation, and says the steep rates were chosen to equalise wealth.
The occupation saw a further aim. Henry Shavell, a financial adviser to General MacArthur’s headquarters, wrote in 1948 that its main purpose was not fiscal but, among other things, “to virtually wipe out the equities of . . . the Zaibatsu.”
What the families lost
Ericson estimates that the ten largest zaibatsu family groups had about ¥630 million taken by the levy, an overall rate of 85%. The zaibatsu family member with the largest taxable assets, Sumitomo Kichizaemon, head of the Sumitomo house, lost 89% of them. Mitsui Takanaga, head of one of the eleven Mitsui family houses, declared ¥47 million in February 1947, and the levy took 87%. These are figures for individuals, not whole family groups. Sumitomo was the house that a hired manager, Iba Teigo, had steered through its crisis half a century earlier.
The levy was not the only blow. Holding companies were dissolved, farmland was redistributed, and inflation ran in triple digits. Ericson estimates that the real value of the family groups’ combined net assets fell by 97% between December 1945 and December 1950. Assuming ¥50,000 as the average for Japanese who paid nothing, he calculates that the levy cut the designated family members’ taxable wealth from 308 times that average to 47 times. His conclusion is measured: the families “emerged from the Occupation with relatively sizable assets”. Poorer, but not ruined.
Then and now
In France, a minimum tax of 2% a year on fortunes above €100 million was rejected by the National Assembly on 31 October 2025, by 228 votes to 172; its author, the economist Gabriel Zucman, criticised the 2027 budget presented on 1 October 2026 as protecting billionaires. In California, voters will decide on 3 November 2026 on a one-time 5% tax on the net worth of billionaires who lived in the state on 1 January 2026. Supporters call such taxes fair and necessary; opponents warn that they drive capital and people away.
The economic historian Barry Eichengreen argued in 1989 that “the only successful levies” occur in cases like postwar Japan, where democratic process was partly suppressed and an outside power imposed the tax. Comparisons need care in both directions.
A fair caveat
All the yen figures are nominal, from a time of very high inflation, so they are hard to compare across years or with today’s money. Ericson’s numbers are a careful scholar’s reconstruction, and the levy’s effect cannot be fully separated from the dissolution of the zaibatsu, land reform and inflation that came with it.
Five lessons to take away
- A single date can decide a fortune. Everything was valued at midnight on 3 March 1946.
- Liquidity decides how you pay. Families that held land and shares paid in land and shares.
- The tax office may look at the household. Japan added together the wealth of relatives living under one roof.
- Inflation can take more than any tax. Ericson ties the 97% fall in the families’ real wealth above all to triple-digit inflation.
- Rules can change in one stroke after a shock. War, defeat and occupation turned the system upside down within months.
Questions to bring to your advisors
If a one-time levy came in where we hold assets, how would our holdings be valued, and on which date? Which assets could we sell or hand over without destroying their value? How much of our wealth depends on a single country’s rules? These are questions to bring to your lawyers and tax advisors, not advice.