Seoul Station is busy with travelers in the morning on Nov. 1, 2021, the first day South Korea’s “living with COVID-19″ scheme went into effect. (Yonhap)
SEOUL, Feb. 8 (Korea Bizwire) — Earned income taxes and social insurance contributions that are withheld at source rose faster than worker wages during the period from 2016 to 2021, a research institute said.
According to an analysis of data from the Ministry of Employment and Labor by the Korea Economic Research Institute (KERI), the monthly average wage at businesses with more than one employee rose by 17.6 percent from 3,105,000 won (US$2,591) in 2016 to 3,653,000 won in 2021.
However, earned income taxes and social insurance contributions rose by 39.4 percent from 363,000 won in 2016 to 507,000 won in 2021.
In particular, the burden of earned income taxes jumped by 70.6 percent from 102,740 won in 2016 to 175,260 won in 2021.
The KERI noted that this was primarily because earned income tax brackets have remained unchanged since 2010.
Even when the wages are pushed with inflation, the upper tax bracket is applied for earned income taxes, thereby creating the effect of automatically raising tax rates.
The KERI pointed out that together with the hike in tax burden, the increase in the inflation rate makes the actual wage level decline further.
The minimum period for workers to be able to buy a house by putting 100 percent of their paycheck in savings stood at 21 years last year, up 9.2 years from 11.8 years in 2016.
J. S. Shin (js_shin@koreabizwire.com)
