In this paper, we measure capital costs of Japanese companies in 8 manufacturing industries and estimate industry-based investment functions from 1991 to 2009 in order to observe the effects of cutting the corporate taxes companies. The measurement results show that cutting corporate tax has reduced capital cost and the estimation results show, especially since 1998, capital costs reduction has increased investment. When it is difficult to cut nominal interest rates, reduction of capital costs by cutting corporate taxes may play an important role in increasing investment.