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SCAP undertook many reforms in its later aborted zaibatsu dissolution program, but one stood out because of its draconian nature. The Capital Levy Law of November 17, 1946, passed by the Diet under strong pressure from SCAP, called for a one-time tax on all personal assets above ¥100,000 ($300); the rates began at 25 percent and rose to 90 percent for assets of ¥15 million ($42,000) or more. In other words, SCAP's policy confiscated the wealth of every rich, or even moderately rich family in Japan, thus wiping out the financial control that the Iwasaki (Mitsubishi), Mitsui, Sumitomo and Yasuda families held over their respective conglomerates. Word of these efforts shocked American businessmen and politicians like Senator William Knowland when they finally heard about them in 1947-1948, and so stimulated the mobilization of a conservative coalition in the United States to block further efforts at breaking up Japanese corporations.
Another important program was educational reform. SCAP believed that by putting American style civics courses in place of the wartime "ethics" education that had inculcated emperor-centered nationalism, by simplifying the Japanese writing system so that students would spend less time memorizing kanji (Chinese characters), by opening up secondary and higher education to a much larger number of students, and by giving women greater educational opportunities, it could encourage independent and democratic thinking at the expense of emperor-centered militarism. In this light, the emperor, in his New Year's Rescript of January 1, 1946, explicitly denied any ideas of his own divinity.
His statement read in part:
The ties between us and our people have always stood upon mutual trust and affection. They do not depend upon mere legends and myths. They are not predicated on the false conception that the emperor is divine and the Japanese people are superior to other races and fated to rule the world.
The key document of SCAP's efforts at democratization is the Constitution of Japan, which went into effect on May 3, 1947. The Constitution, which was promulgated by Emperor Hirohito on November 3, 1946 as an amendment to the 1889 Constitution (under its terms, only the emperor could amend the constitution), passed both houses of the Diet almost unanimously even though written by members of General MacArthur's staff. The new constitution transferred sovereignty from the emperor to the people, established suffrage for all men and women twenty years old or older, continued the prewar parliamentary/cabinet system, created a system of representative local government, and gave the people the same kind of freedoms of speech, assembly and religion that Americans had received under the Bill of Rights of the United States Constitution. Women particularly benefited from the new constitution, which forbade discrimination on the basis of sex, race, social status, or family origin, gave them the right to vote, and allowed them to divorce and inherit property.
The clause of the 1947 constitution that has caused the most long-term controversy is Article 9, the anti-war clause. It reads as follows:
Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes. In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.
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