Only Those Who Pay Taxes Pay”…The Top 10% Pay 80% of Taxes, but the Government Wants them to Pay More

2020-8-25, PennMike [TRANSLATION]

The government collects more taxes on ultra-high income earners. Although tax equity has been compromised to a point where the top 10% of the income bracket shoulders approximately 80% of the total income tax burden, and 4 out of 10 income earners pay no earned income tax, the rich are being asked to pay more.

At a cabinet meeting held on August 25, 2020, the government finalized the “2020 Tax Revision Bill,” which includes revisions of the Income Tax Act, the Corporate Tax Act, and the Comprehensive Real Estate Tax.  After establishing a section for those who exceed the tax base of ₩1 billion ($840,000), the income tax rate for this section will be raised from 42% to 45%.

As a result, some are pointing out that a large portion of the income tax burden is already heavily shouldered by the upper class.

According to the results of an analysis of 2018 income tax by Yoo Chang-hyun (윤창현), a member of the United Future Party, the portion of the total income tax (earned income tax + composite income tax) paid by the top 10% reached 78.3%, with the top 1% paying 41.6%.

When observing the proportion of an individual’s income compared to their tax payments, it becomes clearer that “only those who pay taxes pay.”

As of 2018, although the top 1% of income earned constitutes 11.2% of the total income, the portion of their paid income tax amounts to 41.6%. Similarly, the top 10% of income earned makes up 36.8% of total income, but their share of the tax burden is a whopping 78.3%.

The earned income gap is even larger. As of 2018, salaries in the top 1% and top 10% of wage earners were 7.0% and 31.6%, respectively, but their taxes accounted for 32.0% and 73.7%.

On the other hand, those in the bottom 38.9% did not pay any earned income tax. In other words, the top 1 of 10 individuals pay 73.7% of the tax, but the bottom 4 of 10 are not paying any taxes at all.  

In response, the National Assembly Research Service pointed to “equality among taxpayers,” asserting that “it is problematic to maintain the income tax structure by only changing the tax base section and increasing the tax rate for the high-income bracket,” but critics point out that the government still insists on raising taxes on the rich.

Source : https://www.pennmike.com/news/articleView.html?idxno=35078