[Outlook]Housing tax has innocent victims

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[Outlook]Housing tax has innocent victims

Let’s call him Mr. Kim. He paid the composite real estate tax last year and is subject to it again this year. When it comes to the price of the house he owns, he is one of the 300,000 richest people in Korea. His tax is expected to rise roughly three times compared to that of last year. Last year he felt he should and could pay that much in taxes, but he feels differently this year. He can afford the tax now because he still earns a salary, but he starts to worry that he may not be able to afford the house after retirement.
Mr. Kim lives on the outskirts of Seoul. Even though it is not easy to commute to work, he likes everything else about his neighborhood. There is a park nearby so he can take a walk at any time. There are many mountains around so he can go hiking often. After retirement he wants to enjoy these attractions even more, but he feels worried about whether he will be able to afford it.
He did not buy his apartment on speculation. Seventeen years ago, he drew a lot to buy the house from the builder, which is the most common and also the cheapest way to get an apartment in Korea. He has since lived in this apartment. But now he is worried about the tax, which is to rise suddenly.
Among some 600,000 households that are subject to the composite real estate tax, 30 percent own only one house. Probably some 200,000 are in the same situation as Mr. Kim.
The people’s opinions are divided on the tax owners of expensive houses are paying. Those who are subject to the tax think it is absurdly high and those who are not argue that the owners of expensive houses can afford to pay that much money. Some even say that they wish they were subject to that kind of tax. According to polls, nearly 80 percent of respondents endorse the composite real estate tax.
If the rule of majority is respected in a democratic country, it must be legitimate to enact the law about the composite real estate tax. Even the president and the vice prime minister for the economy say that if you cannot afford the tax, you can move.
The opposition parties and the presidential aspirants keep silent because they do not want to scare away voters.
Here are two questions. Can matters concerning private assets be decided by majority rule? Can leaders of a country intervene in how people should handle their private assets, for instance, by saying, “You should sell your house if you cannot afford it”?
We learned that we need a country to protect individual freedoms, lives and assets. They can argue that they simply want people to pay tax and they do not intend to infringe upon people’s right to have private assets. However, the question is what amount of tax is legitimate.
Let’s say a person needs to move out due to a sudden increase in taxes. Is this simply a matter of taxes? In this case, is the country working to protect the individual’s assets or to take them from him? When we decide matters about assets and tax by majority rule, the populace will always win because have-nots always outnumber haves. If we take this to the extreme, a society can forcibly take assets from some people with a method that is legitimate in democracy. That’s the same with freedom. In the name of a majority, people could oppress someone else’s freedom.
Of course, we should not offer unlimited protection to private property rights, either. Just as an individual’s uncontrolled freedom can infringe upon someone else’s freedom, unlimited property rights could oppress someone else’s freedom and destroy the entire community. If one tries to oppress others with financial power, freedom cannot be protected.
Thus, the only legitimate reason to limit people’s freedom or assets is public good ― not in a totalitarian sense but in a way that people with sensible minds and common sense can agree upon. Since Korea is a small country, people are not allowed to own as many houses as they want to. In particular, if people buy houses for speculative purposes, other people become victims.
If this country is a community of responsible people with freedom, people cannot and should not claim only their rights to own private assets to such an extreme extent that other people lose opportunities to own houses. For this reason, we are reaching an arbitrary consensus that it is reasonable that one household owns one house because that is what people think is for the public good.
If the current composite real estate tax is designed in part as a punitive measure, we should examine whether the amount of the tax goes against the public good, in order to find the legitimacy of the tax.
What would happen to our society if a person needs to be evicted from his only house because he cannot afford the tax and other people applaud to see that? One day people’s lives and freedom could be oppressed in the name of the majority. That is something truly dreadful.

*The writer is the chief editor of the editorial page of the JoongAng Ilbo.

by Moon Chang-keuk
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