[Viewpoint] Bullying the upper class not the answer

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[Viewpoint] Bullying the upper class not the answer

You are not the only one who is less than delighted to pay taxes, but it is the duty of a citizen to pay. Tax revenue is the framework that supports the nation. The expenses of defending the nation from foreign invasion and pursuing the national interest are shared among the citizens.

Every citizen is under an obligation to pay taxes. But when such liabilities are spread among them, there must be clear principles. With the income tax, people are taxed based on what they earn. A progressive tax means those with low income pay a low rate, while those with higher incomes pay a higher rate.

But when a tax is imposed unreasonably just because one’s income is high or prices have risen, we are often faced with social discord. We witnessed serious discord when the comprehensive real estate tax was imposed. Some politicians adopted populist positions to win support from the majority despite dividing society. The Grand National Party, which was an opposition party when the controversial tax was introduced, criticized it as a “peg on the divide.”

However, now that it is the ruling party, the GNP is making a similar attempt to divide the nation. It is promoting the addition of another tax bracket for the highest income earners. At present, the highest tax rate is 35 percent, levied on the income bracket of 88 million won ($76,000) and over.

The revision of the tax law in 2008 lowered the tax rate for this bracket by 2 percent to boost the economy. However, the Grand National Party is considering a proposal to keep a higher tax rate for those who earn more than 120 million won. Their justification is the burgeoning fiscal deficit, and the resulting need for more revenue. The plan is expected to rake in an additional 480 billion won.

But will the additional tax revenue really help the national finances? Based on 2007 data, 7,748,870 citizens paid earned income tax. Among them, 52,542 people, or only 0.68 percent of the total number who paid the earned income tax, reported income of over 100 million won.

The additional tax revenue of 480 billion won accounts for merely 3.4 percent of the total earned income tax revenue of 14.114 trillion won collected throughout the year of 2007. It is only 0.3 percent of the total tax revenue estimated collected last year, or 168.6 trillion won.

If they are really worried about the national finances, it is better to keep spending frugal. Their true intention seems to be to silence the controversy over the tax cuts for the rich and win the favor of working-class citizens by bullying high income earners.

In 1588, England desperately needed money to build warships and cannons for the battles against the Spanish Armada. Queen Elizabeth I had never forced the citizens to pay high taxes. She did not impose higher or lower taxes depending on class but levied equal taxes for all. Thus, England could not afford to go to war.

England was a candle flickering in the wind.

However, surprisingly, citizens started to pay more voluntarily to save the queen and the nation. Thanks to the support of the citizens, England defeated Spain and laid the foundation for it to become a great empire.

Should Korea encounter a similar crisis, will Koreans offer to pay more in tax to help the nation? Making political use of tax policy hardly qualifies as helping the working class.

*The writer is a deputy business editor of the JoongAng Ilbo.
Kim Jong-yun

by Kim Jong-yun

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