[2022 National Audit] 'Yurijibap' Income Tax Increases by 9% Annually on Average... Twice the Growth Rate of Corporate Tax

Office of Democratic Party of Korea Representative Goh Yong-jin
"Income tax rising steeply... Need to brake the taxation speed for employees and self-employed"

On the morning of the 21st, when the temperature in Seoul dropped to 14 degrees, office workers are seen wearing coats on their way to work at the Sejongno intersection in Jongno-gu, Seoul. Photo by Jin-Hyung Kang aymsdream@

[Asia Economy Sejong=Reporter Kwon Haeyoung] Since the MB administration's (Lee Myung-bak administration) tax cut policy, while earned income tax has increased by an average of 9% annually, corporate tax has risen by only half that rate, 4.7%. There are criticisms that the taxes on salaried workers, the "soft wallets," have risen too steeply compared to income growth.

According to the "Annual Tax Revenue Status by Tax Item" data submitted by the Ministry of Strategy and Finance to Go Yongjin, a member of the Democratic Party of Korea (Seoul Nowon Gap), earned income tax based on last year's settlement was 47.2 trillion won, a 203% increase compared to 15.6 trillion won in 2008. This corresponds to an average annual increase of 9%.

It is expected that earned income tax will surge to 58 trillion won this year. Since 2008, prices have continuously risen, but the tax base was not adjusted, causing earned income tax to increase nearly fourfold.

On the other hand, wage increases have not kept pace with the growth rate of earned income tax. According to the Bank of Korea's national accounts, household income increased by 79.3% (an average of 3.3% annually) from 715 trillion won in 2008 to 1,281 trillion won in 2021, and the wage and salary component of household income rose by 91% (an average of 3.7% annually) from 442 trillion won to 846 trillion won during the same period. Compared to any of these, income tax has increased more than twice as much as income.

Looking at corporate tax, it increased by 79.6% from 39.2 trillion won in 2008 to 70.4 trillion won last year. The average annual growth rate was 4.7%. Corporate income rose by 82.9% from 287.5 trillion won to 525.8 trillion won during the same period. This means corporate income and corporate tax increased at the same rate. The office of the lawmaker pointed out that this differs from households, where the increase in tax burden was greater than income growth.

Regarding the proportion of tax revenue relative to national tax, corporate tax decreased by 2.9 percentage points from 23.4% in 2008 to 20.5% in 2021, while earned income tax increased by 4.4 percentage points from 9.3% to 13.7%.

Assemblyman Ko said, "Recently, compared to household income growth, income tax has risen too steeply," and explained, "Those who actually need a brake on the pace of taxation are not large corporations but salaried workers and self-employed individuals." He added, "The reduction of the highest corporate tax rate should be withdrawn, and the resources should be used to further expand income tax cuts."