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KMID : 1124020100260040293
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Korean Social Security Studies
2010 Volume.26 No. 4 p.293 ~ p.324
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A Study on the Balanced Combination of Welfare Expenditure and Tax Burden
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An Chong-Bum
Ahn Sang-Hoon
Jeon Seung-Hoon
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Abstract
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This study aims at estimation of balanced Korean welfare expenditure. We estimated balanced level of welfare expenditure under the consideration of individual income level and macro fiscal situation. The result of the analysis shows that long-term welfare expenditure might end up with a serious fiscal crisis if not much higher level of tax burden. By the year of 2050, Korean welfare expenditure will rise to 41.06% according to the definition of OECD public social expenditure, to 26.26% according to that of central government finance. Hand in hand, level of national debt might reach 203.37%. To bridge such a big gap of financial deficit, tax burden should be raised by at least 40%. As it is hard to decide if Koreans can accept such a high level of tax burden by the year of 2050, then, we need to find out the balanced combination of adequate level of tax burden and welfare expenditure. When we should keep the level of national debt under 60% of GDP, possible combination of tax burden and welfare expenditre can be 25% vs. 14.7%, 30% vs. 18.54, and 35% vs. 22.36, respectively.
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KEYWORD
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welfare expenditure, tax burden, financial risk
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