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KMID : 1124020170330040107
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Korean Social Security Studies
2017 Volume.33 No. 4 p.107 ~ p.132
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Redistributive and tax burden effects of earned income tax system reform since 2008
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Park Jong-Seon
Jeong Se-Eun
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Abstract
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Korean household income tax system has experienced no little change in its nominal tax rate structure and deduction measures since 2008. This paper focuses on the impact on household earned income of these changes, especially analyzing the impacts on effective tax rates, income re-distribution and progressivity indices of household income tax system as well as the distribution of effective tax burden and after-tax-income shares across households. These indices are normally influenced by the way the nominal tax rate structure and a variety of deduction measures are designed. The result of changes in these factors during 2008 and 2014 lowered re-distribution index and total effective burden rate and increased progressivity and the ratio of non-tax payers. The decrease in income re-distributive effect seems to be attributed to the decrease in deduction for wage and salary income. By the way, analysis of income share ratios of the whole households shows share of lower 40% households has mildly decreased during that period. As the income distribution of household has been seriously aggravated, the changes in household income tax system in the last ten years cannot be considered to be desirable.
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KEYWORD
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household income tax system, income redistributive effect, income deduction, tax credit
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