Welfare is indeed about money

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Welfare is indeed about money

Democratic Party Chairman Sohn Hak-kyu said Monday that welfare “is about philosophy and will” rather than money.

Former Grand National Party Chairwoman Park Geun-hye made a similar remark, saying it’s a “shame” that everything is about money. “It’s more important for society to be compassionate toward the underprivileged and pay attention to this segment of the population,” she said.

They are right about the underlying issues in the debate over how to best structure an effective welfare system. The problem, however, is that politicians are only talking about these ideas because they will generate votes.

And it is, in fact, all about the money.

The key to the current debate is not whether a universal or more selective welfare system is most appropriate, as politicians have framed it.

Rather, it’s about taxes and - more accurately - how much should be assessed to support the less-fortunate members of society. In essence, the debate involves having higher taxes for broader welfare programs or lower taxes for more limited programs.

Some liberals believe that the only way to finance the Democratic Party’s free welfare benefits is to increase the tax rate. Chung Dong-young, a member of the DP’s Supreme Council, said that “a welfare policy without a financing plan is a sham.”

In the Scandinavian model, citizens funnel a relatively large portion of their incomes into welfare programs via taxes. Koreans currently pay a tax rate of about 26.5 percent, a large portion of which goes to welfare. Under the DP’s plan, at least 100 trillion won ($89.5 billion) in annual funding will be needed to pay for various welfare programs. Some liberal lawmakers say that the government would need to double the income tax rate as a result.

Of course, there is another way to provide broader welfare programs without increasing taxes: boost sovereign debt. But that amounts to pushing the burden of paying for these programs onto the next generation. DP Chairman Sohn has argued that fiscal reform and higher taxes for the rich will give the government enough money to finance its welfare plan. This, however, is nothing more than sugarcoated rhetoric.

Park is also misleading the people. Without a concrete plan to fund the pledges, her statements are nothing but empty promises. They must stop engaging is opportunistic behavior by glossing over the discussion about a tax increase while touting universal welfare.
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