[Insight & Opinion] Universal Subsidies Are Sorcery; The Alternative Is a Trust System

Provide Substantial Support to Low-Income Groups
Establish Trust Companies to Facilitate Family Support
and Asset Utilization Among Wealthy Households

Providing subsidies to the entire population regardless of economic ability is close to a form of sorcery. As the dictionary definition suggests, it is an improper, cunning, and deceitful method. It is no different from the "modern-day rubber shoes" distributed to gain votes.

Moreover, it is a policy that left-wing administrations cannot boast about. When money is distributed equally under various pretexts, low-income groups are busy scraping by just to maintain basic living, while the upper class ends up with surplus assets that can improve their quality of life or be invested in education. Ultimately, this widens the gap between the upper and lower classes.

It is argued that paying with local currency can help revitalize the economy, but this is also not true. Low-income groups spend only the minimum, and high-income groups merely substitute existing consumption. It only provides an alternative payment method. Although it is said to promote local economic revitalization, this too has many side effects. It causes confusion in border areas and is unfair when there are disparities between regions.

Even if the state does not fall into default by absurdly increasing national debt through distributing money under names like basic income or free subsidies, ultimately, the state's ability to support will shrink, resulting in greater hardship for low-income groups. Political forces that ignore this obvious truth and continue to distribute money are simply irresponsible.

With a rapidly approaching low birthrate and super-aged society, we need to change our thinking. Instead of distributing money to the entire population while burdening the already increasing debt and exhausting the treasury, regardless of the name, more substantial support should be provided to low-income groups, and wealthy asset holders should be allowed to freely support within their families. Support for housing, marriage, childbirth, childcare, education, and elderly care within families should not be taxed with gift tax; rather, it should be seen as reducing the state's burden by resolving what the state should support within families.

There is a good model in the neighboring country Japan. It utilizes a trust system. By entrusting assets to a trust in preparation for discovering matters that need family support, those eligible can claim support within the scope of the trust. In this case, gift tax on the entrusted assets can be exempted to activate the system. The state could also use funds through a trust company established by the government, similar to the national pension.

This would allow more rapid utilization of over 40% of personal assets held by the elderly in society and enable the development of various support systems on behalf of the state. It can alleviate the burdens of housing, marriage, and childcare for the younger generation, effectively boosting the birthrate even without direct state support, and legalize informal gifts within families. The elderly can use insurance or pensions for their retirement, and children can support their parents more freely through trusts.

Instead of turning a blind eye to the increasing debt and resorting to sorcery, we must change our approach. Rather than inciting slogans like "tax cuts for the rich," we should open paths for the state to utilize the assets they hold on their behalf.

Kim Hong-jin, CEO of Work Innovation Lab