[Opinion] The Paradox of the Common Billion-Won Annual Salary

Rapid Increase in Billion-Won Salary Earners, Growing by 200,000 Annually
High Salaries but Feeling Deprived Due to Inflation and Taxes

"Many people at the manager level earn an annual salary of over 100 million won."

This was said by an executive at Samsung Electronics. The starting salary for a college graduate at Samsung Electronics is 55 million won. Managers receive about 80 million won. On top of this, there is an excess profit bonus paid once a year of up to 50% of the maximum annual salary, and a performance incentive paid twice a year of up to 100% of the base salary. As a result, among managers with 8 to 13 years of service, some earn annual salaries in the 100 million won range. In the past, an annual salary of 100 million won was a dream for office workers. Now, such high earners have become common. The proportion of workers earning 100 million won or more rose from 0.16% in 1999 to 6.42% in 2022. In the 2010s, the number of workers earning 100 million won increased by 65,000 each year. Recently, this number has been growing even faster. In 2021, it increased by 207,000, and in 2022, it rose by 194,000, reaching 1,317,000.

With more money earned, life satisfaction should have increased as well. However, the reality is somewhat different. First, the value of money has dropped significantly. In the 1980s and 1990s, it was said that "having 3 billion won would allow you to live a lifestyle similar to Chairman Lee Kun-hee." That meant enjoying a lifestyle comparable to that of a conglomerate owner in terms of food, clothing, and shelter. For example, in 1990, the price of jajangmyeon was 1,073 won. Last year, that price soared to 6,361 won (according to Korea Price Information). In 1979, the sale price of a 34-pyeong apartment in Daechi-dong Eunma Apartments was 23.5 million won. The current market price is around 2.5 billion won.

In 2004, the annual salary for a Samsung Electronics manager was around 50 million won. However, the jajangmyeon price at that time was 3,222 won, about half of today's price. The most expensive phone in 2004, the Hyori mobile phone (SPH-V4200), was priced in the 600,000 won range, while Samsung Electronics' Galaxy S24 now costs around 1.6 million won. Are managers earning 100 million won today financially better off than managers 20 years ago?

Recently, Asia Economy posted an article online titled "Nowadays, common 100 million won earners... how much actually goes into their bank accounts?" It stated that after taxes and other deductions, the actual amount received is 6.58 million won. Many people read it and commented that many high earners have little to show for it and live a tough life. The biggest complaint was about taxes. The proportion of earned income tax paid by those earning over 100 million won has been steadily increasing. In 2022, people earning over 100 million won paid 62.7% of the total earned income tax. This proportion was 55.4% in 2018 and about 15% in 1999. Earned income tax is a progressive tax, meaning those who earn more pay more. It is just that those who earn more pay more. The problem is that considering soaring prices, it doesn't feel like they are earning more, but they are paying more.

Those earning less are also dissatisfied. The proportion of workers who do not pay earned income tax due to low salaries continues to decrease. In 2022, 33.6% of workers did not pay earned income tax. This was 38.9% in 2018 and reached 41.2% in 1999. As the minimum wage continues to rise, the number of people exempt from income tax will continue to decline.

The government is not just watching. In 2022, the government revised income tax for the first time in 15 years. The lower tax brackets were raised. For example, the income tax rate of 6% was applied to annual incomes up to 14 million won instead of 12 million won. Considering the value of 12 million won 15 years ago and 14 million won today, this still feels insufficient. If corporate tax were linked to inflation, complaints might disappear.