"427 Born with Dividend Gold Spoon... Increased 3.6 Times in 3 Years"

Office of Kim Ju-young, Democratic Party Lawmaker, Analyzes National Tax Service Data
172,000 Minor Rental Income Earners... Earned 288.9 Billion Won in One Year

[Sejong=Asia Economy Reporter Kim Hyun-jung] Early gifting and inheritance targeting minor children, which have rapidly emerged as tax-saving methods for high-income earners, have recently increased sharply. The number of '0-year-olds' who started earning dividend income right after birth reached 427, and the number of minors generating rental income exceeded 172,000.

On the 27th, Kim Ju-young, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, analyzed the '2016-2019 Status of Minor Dividend Income and Real Estate Rental Income' received from the National Tax Service and confirmed that dividend and rental income earned by minors under 18 years old have been rapidly increasing every year.

Based on 2019 data, 172,942 individuals aged 0 to 18 earned a total dividend income of 288.932 billion won, marking the highest amount ever recorded. The average annual income per person was 1.67 million won, an increase of 220,000 won per person compared to the previous year, and a 67% rise compared to 2016. In particular, the number of 0-year-olds earning dividend income immediately after birth was 427 in 2019, a 3.62-fold increase from 118 in 2016.

A similar phenomenon is observed in the real estate market. An analysis of real estate rental income reported by minors filing comprehensive income tax showed that minor rental income earners earned an average rental income of about 20 million won per person annually. The number of earners and the amount also showed a sharp increase each year: ▲2015 - 1,795 people, 34.9 billion won ▲2016 - 1,891 people, 38 billion won ▲2017 - 2,415 people, 50.4 billion won ▲2018 - 2,684 people, 54.8 billion won ▲2019 - 2,842 people, 55.8 billion won.

The 'generation-skipping gift' where grandparents gift to grandchildren has also nearly doubled in both cases and amounts over the past five years. As asset values rise rapidly, it is considered better to make early gifts despite paying additional taxes, thereby reducing the number of gift procedures. Regional disparities are also significant, with 21% of generation-skipping gift cases and 28% of the amounts occurring in the Gangnam 3 districts nationwide.

There are also calls for strengthening the National Tax Service's role in imposing and collecting gift taxes. A 2020 audit by the Board of Audit and Inspection revealed that three tax offices under the Seoul Regional Tax Office, including Gangnam Tax Office, failed to impose gift taxes on six individuals who omitted or miscalculated additional amounts for generation-skipping gifts. Among them, one individual was 17 years old in 2017 and omitted part of the additional amount when receiving a 2.2 billion won gift from a grandfather. The uncollected gift tax due to such omissions amounted to 16 million won.

Regarding this, Lawmaker Kim Ju-young emphasized, "We are facing intensified wealth inheritance and income inequality, and the income redistribution function, which is one of the core roles of tax policy, is weakening," adding, "The Ministry of Economy and Finance and the National Tax Service must more thoroughly verify tax evasion and disguised gifts and respond strictly."