More high-incomers may face tax hike
By Kim Hyo-jin
The ruling Democratic Party of Korea (DPK) is discussing creating a new tax bracket for high-income earners in an effort to increase taxes on the rich, a party official said Tuesday.
The party and the government are already moving to hike the tax rate for those who earn over 500 million won ($448,000) annually from 40 percent to 42 percent.
The current tax rate for earnings between 150 million won to 500 million won is 38 percent. However, the DPK is seeking to create a new bracket of 40 percent for earnings from 300 million won to 500 million won.
DPK Chairwoman Choo Mi-ae proposed the 42 percent tax rate during a financial strategy meeting with President Moon Jae-in.
If the party plan is realized, around 90,000 taxpayers would see tax hikes, officials said.
A rough number of individuals falling in the highest income bracket ― over 500 million won ― is 40,000, and the number between 300 million won and 500 million won is about 50,000, according to the National Tax Service.
Rep. Kim Tae-nyeon, the DPK chief policymaker, said a revision of the tax system including this plan will be discussed during a meeting between the party and the government, Thursday.
The ruling bloc has pushed for an overhaul of the taxation system that is expected to affect top-earning individuals and businesses.
Choo demanded last week the government increase the corporate tax rate on businesses with annual net profits exceeding 200 billion won ($178.2 million) from the current 22 percent to 25 percent and the income tax rate on individual taxpayers who earn 500 million won a year from the current 40 percent to 42 percent.
Following a positive response by the President, the party is speeding up its tax revision plan.
Framing the envisioned tax overhaul as a “normalization of the corporate tax and tax increase for the super-rich,” DPK party leaders have sought the consensus of the public and parties.
Rep. Woo Won-shik called on the opposition parties to discuss the tax hike plan by setting up a consultative body between the legislature and the government.
“It is inevitable to impose an appropriate level of tax on the super-rich in order to address income disparities. We ask for cooperation from the opposition bloc,” he said during a party meeting.
“We are determined to normalize the failed tax cut policy in the previous Lee Myung-bak government. The public is also backing our policy direction,” he added, referring to the latest Realmeter poll showing 85.2 percent of the respondents support a tax increase.