Policy chief 's idea for 'national dividends' using AI profit triggers concerns

Presidential Chief of Staff for Policy Kim Yong-beom, right, speaks during a press briefing at Cheong Wa Dae in Seoul, April 27. Yonhap

Kim Yong-beom, presidential chief of staff for policy, has proposed distributing excess tax revenue generated from Korea’s artificial intelligence (AI) and semiconductor sectors to citizens, raising concerns in the business community amid an ongoing labor dispute at Samsung Electronics over bonuses tied to the company’s soaring profits.

Though the top policymaker stressed that the idea assumed that excess tax revenue would actually be generated, the proposal, posted on his Facebook page on Monday night, affected the uptrend of the benchmark KOSPI and Samsung Electronics shares on Tuesday.

In the post, Kim wrote, “If Korea’s strategic position in the AI infrastructure supply chain creates a structural boom that leads to record-high excess tax revenue, how to use that money is not merely a matter of choice, but a matter of policy design.”

“The gains from the AI infrastructure era are not the result of a few specific companies alone,” he added. “They are built on an industrial foundation accumulated by the entire nation over the past half-century. If so, part of those gains should be structurally returned to all citizens.”

Calling this a “national dividend,” Kim did not mention specific companies, but it is widely regarded as referring to Samsung Electronics and SK hynix, the two memory chipmakers that posted huge operating profits in the first quarter.

SK hynix’s labor and management last year agreed to remove the cap on performance bonuses and allocate 10 percent of its operating profit for payouts, but Samsung Electronics’ labor and management are locking horns over labor unions’ demand for a 15 percent allocation. Samsung Electronics unions have threatened to stage an 18-day strike beginning May 21.

Though Kim said his intention was to discuss how the government should utilize “excess tax revenue,” he referred multiple times in the post to “excess profits,” mentioning “how to distribute excess profits generated in the AI era” and “ways of returning some of the gains to support social stability.”

Image generated by OpenAI’s DALL-E

The post immediately triggered a negative reaction in the market. The benchmark KOSPI opened Tuesday’s trading on a bullish note, climbing as high as a record 7,999 points, but sharply reversed course after reports on the post began circulating after 10 a.m., falling by as much as 5.12 percent to as low as 7,421. Shares of Samsung Electronics and SK hynix also dropped sharply around the same time.

The market decline eased after Kim’s clarification, but KOSPI still closed at 7,643 on the day, down 2.3 percent, marking its first decline in six sessions. Shares of Samsung Electronics and SK hynix also fell 2.28 percent and 2.39 percent, respectively.

After Tuesday’s session closed, Cheong Wa Dae said Kim’s proposal was “a personal opinion” and had nothing to do with internal discussions within the presidential office. However, concerns are growing among the business community here, who fear the proposal may signal a pressure to share profits with the general public, even if based on excess tax revenue.

“Although he premised the idea on excess tax revenue, such revenue can always be created by raising taxes. In the end, the core idea does not appear much different from the far-fetched arguments often seen in online communities calling for corporate operating profits to be shared out of jealousy,” an AI industry official said.

“The logic is ultimately that corporate profits should be shared because they were built on infrastructure funded by taxpayers. But by that logic, wouldn’t all companies be considered beneficiaries of public infrastructure?”

Choi Seung-ho, center, the chief of Samsung Electronics Labor Union, attends follow-up mediation procedures at the National Labor Relations Commission office in Sejong, Tuesday. Yonhap

The Lee Jae Myung administration has already raised the top corporate tax rate back to 25 percent, reversing the previous administration’s across-the-board 1 percentage point cut in corporate tax rates.

Another industry official said that treating corporate profits as a target for social redistribution could undermine companies’ autonomous investment and management decision-making.

“Excess profits are not a source for short-term distribution, but a key resource for future competitiveness through research and development, facility investment and job creation,” the official said. “If certain policy signals lead companies to consider more conservative management and reduced investment, it will ultimately weaken the country’s industrial competitiveness and long-term growth potential.”

Kim’s proposal to return excess tax revenue to citizens rather than use it to reduce national debt is also in line with President Lee Jae Myung’s calls to boost domestic demand through expansionary fiscal policy rather than austerity. During a Cabinet meeting on Tuesday, Lee stressed that Korea’s debt structure remains very sound and that “this is an era in which spending is a virtue.”

Opposition parties lashed out at Kim’s proposal, arguing that the government’s role is not to redistribute corporate profits, but to manage public finances properly using tax revenue.

“If people want dividends, they can become shareholders,” Rep. Park Soo-young of the main opposition People Power Party wrote on his Facebook. “Anyone can buy shares in companies benefiting from AI and semiconductors, earn returns based on corporate performance and receive dividends. Why should companies distribute profits for the Lee administration’s so-called ‘profit redistribution scheme’ to people who are not even shareholders?”

Rep. Lee Jun-seok of the Reform Party wrote on Facebook, “If additional tax revenue is generated, the priority should be to manage it responsibly and use it to repay the country’s debt, rather than using it for vote-buying.”