[Deep EYE] Tax policy as a political instrument… Top 20% who became 'Hogu'

In our society, the setting of income quintiles or income ranges applied to policy implementation has a much more complex meaning than developed countries with similar economic powers to ours.

Because there's a lot more political calculations going on.

Income deciles are used as basic data when promoting policies related to welfare or wealth distribution.

However, in Korea, this classification of income is sometimes recognized as a criterion for division of camps or a political tool aimed at more votes, not only by politicians but also by the general public.

The same is true of the controversy over the payment of disaster aid to the bottom 80%, which is heating up recently.

In fact, the setting of the lower 80% is a very awkward and unfamiliar concept of division.

It is common to classify small categories such as the bottom 10% or 20%, but setting the range of the bottom 80% is a special case created by the unprecedented corona disaster situation.

However, here, many people feel the 'déjà vu' of splitting like a trauma.

Such a feeling will probably reach out to the high-income class naked, and subtly to the lower-middle class.

Highest income tax burden in the OECD ⇔ The ratio of tax-exempt workers is the highest in the OECD

Where does the emergency fund come from? It is, of course, money that is paid out of taxes paid by the people. However, there is one thing to consider. According to an analysis by the Korea Institute of Taxation and Finance several years ago, tax paid by the top 10% of domestic income tax accounts for a whopping 87% of the total, which is significantly higher than 70% in the US, 60% in the UK, and 54% in Canada.

If it expands to the top 20%, it is self-evident that it will account for more than 90% of the total income tax, which is the highest level in the OECD. On the other hand, in Korea, about 40% of all earned income earners pay no tax, considering the year-end tax refund. This rate of income tax exemption is also the highest among OECD countries.

Due to the extreme tax policy on the high and low income earners, 20% of the top earners in Korea pay more than 90% of the total income tax, but are excluded from the various benefits provided by the state, and 40% of the workers pay less than a penny in income tax. It can be interpreted as enjoying many benefits provided by the state.

Complaints are often expressed through Internet comments. Complaints that the state is targeting a small number of upper-income earners and using them as a political tool to alleviate the sense of deprivation of the majority of the lower-middle-income earners, as well as those who pay no tax, are taxed from those who pay more than 90% of the tax. Complaints that they are clamoring for more bites are also frequently seen.

Income tax is a progressive tax.

The higher the income, the higher the tax rate, thereby reducing inequality and increasing tax equity through the redistribution of wealth.

In that sense, the high-income earners are already taking on the social responsibility for a lot of income regardless of their will.

The policy of giving subsidies to 80% of the people may be welcomed by 80%, but the reason why the public is tired of unnecessary controversies is probably because of people's doubts about the transparency and rationality of various tax policies that have been implemented so far.

A significant number of citizens believe that the overall real estate tax imposition on the top 2% or the increase in the top income tax rate, irrespective of whether or not they benefit from it, is for political purposes rather than tax equity, in other words, by imposing 'punitive' taxation on the minority on the part of the majority. It is thought that this is because the political engineering that relieves the feeling of deprivation of the majority and obtains votes worked.

Widening the gap between rich and poor during economic recovery ⇨ Concentrated support for the low-income class is justified

Disaster situations widen the gap between the rich and the poor. Among them, the corona pandemic is widening the gap more widely and continuously. In the meantime, the government's projected economic growth rate for this year, of course, is a base effect from last year's economic downturn, but it is estimated that it will reach a whopping 4.2% and that there will be one million people earning in the billions.

The economic recovery situation that appears during the deepening gap between the rich and the poor suggests that it is reasonable to assume that the small-scale self-employed and the vulnerable will be relatively more difficult than the small-scale self-employed who were hit directly by the corona virus, rather than assuming that all people are equally difficult.

Therefore, in order to achieve the effectiveness of the disaster aid, it would be preferable to significantly reduce the scope and increase the amount to the bottom 30-40%. As the next best solution, rather than giving halfway through 80% or so, it is better to reduce the amount a little and pay it to all the people to alleviate the feeling of deprivation of the top earners who have been 'protected' and aim for national unity.

The exclusion of punitive taxes and benefits for the upper-income earners is a shady product of political engineering that seeks to exploit anti-wealthy sentiment regardless of age or age. It puts emotions ahead of logic, creating a major rift in the country's unity and sustainability.

Some may argue that some developed countries also pay the bottom 80-90%. However, each country is different, so it is not reasonable to say that it is right for others to do it. Moreover, in that country, there is no political conflict of division according to income class as severe as ours.

Democracy is formally a process of decision by the majority, but it has completeness when it considers the minority in the process. If politics caters to and instigates the tastes of the majority, and the overwhelming power of the majority rejects the minority, it is bound to be accused of being the dictatorship of the majority disguised as democracy. A policy that excludes a minority who bears the absolute amount of tax goes against the definition of tax.