SEOUL, Nov. 14 (Korea Bizwire) – South Korea’s highest income tax rate for high-income earners is already higher than the average of OECD states, a report said Monday, opposing a move by opposition lawmakers to further raise the rate for the highest income earners.
The report from the Korea Economic Research Institute (KERI) noted the country’s highest possible income tax rate currently stands at 38 percent, compared with the average 35.9 percent of all member countries of the Organization for Economic Cooperation and Development.
The report also cited a problem arising from what it called a low lower ceiling for high income earners.
Currently, anyone who makes more than 150 million won (US$128,248) a year in earned income is subject to the highest tax rate.
The report said those who make more than 150 million won a year will end up paying up to 30 percent of their earned income in taxes even after various deductions, while those who make less only have to pay an average 4.3 percent of their earned income in taxes.
The report came as a number of opposition lawmakers have proposed revisions to the tax law, calling for a further rise in the tax rate for high-income earners to as high as 50 percent.
“Raising the tax rate for high-income earners will place too great a burden on high-income earners whose tax burden is already too high,” the report said.
“The fact that the proportion of people exempt from income tax currently stands at over 48 percent and that less than 70 percent of businesses are actually taxed suggests that revising tax deduction and exemption programs may be more effective in increasing tax revenues,” it added.
KERI is a private think tank run by the Federation of Korean Industries, the largest business lobby in South Korea that represents the 600 largest firms here.