It's time to put tax hike issue to intense public debate
Some lawmakers from the ruling and minor opposition parties have proposed legislation aimed at taxing the wealthy and large businesses more to help raise the funds needed to cope with the COVID-19 crisis.
A bill proposed by Rep. Lee Sang-min of the ruling Democratic Party of Korea (DPK) last week envisions raising income and corporate taxes on the rich and large companies by 7.5 percent temporarily for three years under the name of a "social solidarity tax." The proposed tax is set to be imposed on about 570,000 individuals whose income tax base exceeds 100 million won ($88,700) a year and 103 large businesses whose corporate tax base surpasses 300 billion won. The tax revenue generated over the period ― 2022-25 ― is estimated to reach 18.3 trillion won.
The revenue would be used to, among other things, compensate small business owners for their losses from business suspensions and restrictions under the government's quarantine guidelines, and provide wage subsidies for small- and medium-sized companies that have borne the brunt of the pandemic.
Major economies are going all out to hike taxes on the rich to raise funds against deepening social polarization and the worsening fiscal imbalance amid the coronavirus pandemic. U.S. President Joe Biden proposed a tax hike on the wealthiest Americans last month. The proposal would raise the top marginal income tax rate to 39.6 percent from 37 percent and nearly double taxes on capital gains to 39.6 percent for people earning more than $1 million.
Letting the wealthy shoulder more of the burden might be unavoidable here, too, given the urgent expansion of social safety nets and the negative impact of state bond issuances on the country's fiscal health. However, taxing specific groups has often been criticized as anti-market, so it's not desirable to single-handedly pass the responsibility of tiding over the crisis to the rich. It's time to put the issue of tax hikes to intense public debate so that we can build a social consensus.