[단독] Workers’ income tax’snowball’… 45% increase in 5 years

◆ Thinner glass wallet ◆

Earned income tax, a tax paid by salaried workers, has increased by 50% over the past five years. As of the end of 2019, it exceeded 40 trillion won. The effective tax rate, obtained by dividing the determined income tax amount (actual tax paid after various deductions) by the total salary, also rose rapidly, showing that the tax burden of’glass wallets’ workers is increasing. This year, tax revenues are expected to increase to 4.3 trillion won this year, with the increase in the highest tax rate for high income earners of over 1 billion won.

As a result of analyzing the’National Tax Statistical Yearbook’, which was recently published by the National Tax Service, Maeil Economic Daily, the amount of earned income tax borne by new office workers increased by 45.7% over the past five years. The small tax surpassed 30 trillion won for the first time in 2016 (30.8 trillion won) from 28.200 trillion won in 2015, and 41.1 trillion won last year. This year, the highest income tax rate will increase from 42% to 45%. An official from the Ministry of Strategy and Finance said, “This year, the local tax revenue is estimated at 43,522.8 billion won.”

The effective tax rate has increased from 4.98% in 2014 to 5.57% in 2019. This means that the various deduction benefits provided to workers are decreasing. The superficial reasons for the increase in small tax revenues are an increase in the number of workers and an increase in wages. The number of people subject to year-end settlement, which measures the number of earned income earners, increased by 1.43 million from 17.73 million in 2015 to 1916,7273 in 2019. However, the influence of the Moon Jae-in administration’s adjustment of the income tax rate once also played a significant role. The government expanded the maximum income tax range from over 300 million won to over 150 million won in 2014, but the Moon Jae-in administration raised the highest tax rate from 40% to 42%. As a result, the top 10% of high-paid salaries are paying more than 70% of the total tax revenue.

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Leaving 36% of the office workers on the small tax guide… High-income and middle-class household burdens

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The sadness of a glass wallet office worker

When the average salary of an employee rises by 3%
Earned income tax is 9% per year

When income rises, the tax rate increases
Middle-class and above office workers hit by bomb

Expert “Income Tax Principles
If you don’t, you may face tax resistance.”

The rate of increase in the earned income tax tax paid by wage workers is rising sharply. Comparing the five years from 2015 to 2019, the earned income tax revenue increased by 45.7% from 28.2 trillion won to 41.1 trillion won. During the same period, the average annual salary for workers rose only 15.2% from 32.5 million won to 37,000 won. The rate of increase in earned income tax for wage workers exceeded the rate of increase in earned income three times. The tax burden of workers with relatively high earned income continues to increase. In the Moon Jae-in administration, the highest income tax rate increased once two years ago, and this year it rises to 45% again.

According to the National Tax Statistical Yearbook, the number of year-end settlement workers vested in 2019 was 19.07 million, an increase of 2.6% from the previous year, and the average salary per worker was 37.47 million won, an increase of 2.5%. However, the earned income tax rose 7.3% to 41.1 trillion won. Most directly, as the government changed various deduction systems, the rising tax burden of middle-class and above workers had a major impact. In 2013, the Ministry of Strategy and Finance changed the year-end settlement items such as child personal deduction, medical expenses, and education expenses from’income deduction’ to’tax deduction’ with the intention of strengthening the income redistribution function. Income deductions are deducted from a certain amount of gross benefits subject to tax. The more benefits are received, the lower the tax base (amount subject to taxation, which is the basis for calculating the tax), and it reduces the monthly salary of high-income people, which is advantageous for high-income families.

On the other hand, the tax credit is advantageous for the low-income class because it reduces a certain percentage or amount from the calculated tax amount calculated by applying the tax rate in the table. In the end, after the change in the deduction method, the tax burden on the high-income and middle-class groups increased.

The current income tax rate is △12 million won or less 6% △46 million won or less 15% △88 million won or less 24% △150 million won or less 35% △300 million or less 38% △500 million or less 40% △more than 500 million won It is divided into 42%. As for the current income tax rate, the highest income tax rate for the Moon Jae-in administration increased from 40% to 42%, resulting in an increase in the burden of high-payers. Shinhan Bank’s tax team leader Woo Byung-tak said, “As income deductions are converted to tax credits, the transition to a high-income tax rate is accelerated,” he said.

In response to the Corona 19 crisis, as the government suffers from a lack of tax revenue, the dependence on tax revenue on earned income tax is also growing.

In particular, the government will create a section that exceeds the tax base of 1 billion won from this year, and increase the income tax rate for this section from 42% to 45%. This means that the tax burden of high income earners gets heavier.

Experts and some of the politicians point out that the establishment of a new maximum tax rate while leaving nearly 40% exempted from earned income tax is a direct violation of the principle of’wide tax sources, low tax rate’, which is the basis of tax policy.

Professor Park Hoon of the Graduate School of Taxation at the University of Seoul said, “The country’s income tax is on the rise, but that 36% of those with a determined tax amount of ‘0’ means that the burden of high-income middle-class workers is increasing.” “The tax law needs to be revised.” Of course, there is also an increase in the number of high-paid salaries. In 2019, the total salary exceeding 100 million won was 852,000 (4.4% of the total), an increase of 50,000 from the previous year. Five years ago, in 2015, the number was 596,000, but in the five years, it increased by 255,000.

The declining tax credit benefits are also a factor in the increase in the tax burden of office workers. Until 2018, tax credits were applied to all children under the age of 20, but from the year-end settlement attributable to 2019, only children aged 7 or older are deducted because they overlap with the child allowance paid by the government.

Professor Park warned, “If the government fails to secure the taxation equity of’wide tax sources, low tax rate’ in a situation where the government has more places to spend money due to the Corona 19 crisis, the tax resistance of these high-income middle-class classes may be considerable in the process of tax increase.” .

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