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KMID : 1124020220380040003
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Korean Social Security Studies
2022 Volume.38 No. 4 p.3 ~ p.36
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Analysis of the Income Inequality Reduction Effect of the Income Tax System Through Model Simulation
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Kim Min-Jung
Choi Young-Jun
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Abstract
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As socio-political concerns about income insecurity and inequality increase, policy responses to these issues are also increasing. Despite alleviating inequality due to its own redistribution function, the tax system tends to receive relatively less attention compared to welfare policies when exploring ways to alleviate income inequality. Therefore, this study attempted to examine the role of the tax system as a measure to alleviate income inequality and as a means of raising financial resources. To this end, based on recent discussions and literature, we established alternative taxation models to test their different effects on alleviating income inequality and the possible financial resources each model could produce. The data of the 12th National Survey of Tax and Benefit was used for the analysis, and changes in income inequality were examined through simulations of the income tax model and the aggregate tax model. As a result, the model that abolished or reduced the tax relief elements showed a large effect on alleviating income inequality, and it is likely to secure more financial resources than other models. The results of this study are expected to give implications for reforming the Korean income tax system in the near future.
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KEYWORD
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Income tax system, Income inequality, Financial scale, Model simulation, Tax system reform
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