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KMID : 1124020160320040125
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Korean Social Security Studies
2016 Volume.32 No. 4 p.125 ~ p.152
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Introducing child allowance and reforming tax support systems
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Lee Sang-Eun
Jeong Chan-Mi
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Abstract
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This study explores an introduction of a child allowance and reform alternatives of tax expenditure systems with regard to income support policy for the households with dependent children in Korea. To do this, this study analyzes the cases of Sweden, the UK, and the US and compares them with the Korean case. And then this study also simulates the changes of benefits according to 8 different alternative models. On the basis of the results, this study suggests the following policy implications. First, the current Korean income support system needs to transform from the regressive income deduction system through the tax expenditure to the universal progressive system by introducing child allowance programs. Second, the favorable form of child allowance is an universal system. Third, of the tax expenditure programs, the income deduction and the non-refundable tax credit program needs to be abolished, while the refundable tax credit programs are sustained. Fourth, in the mid-to-long term, the EITC needs to be enlarged to include the middle class.
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KEYWORD
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child allowance, child benefit, tax support, income deduction, tax credit, earned Income tax credit, EITC, child tax credit, CTC
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