Lee’s inheritance tax proposal raises doubts
Published: 17 Feb. 2025, 00:00
Democratic Party (DP) leader Lee Jae-myung has introduced a proposal to revise the inheritance tax, vowing that no one should have to sell their home due to tax burdens. His plan seeks to increase the flat deduction from 500 million won ($346,000) to 800 million won and the spousal deduction from 500 million won to 1 billion won. If enacted, the maximum tax exemption would rise to 1.8 billion won. Given that last year’s median apartment sale price in Seoul was approximately 1.27 billion won, a significant number of properties would still fall under the inheritance tax’s purview. With asset values continuously rising and the deduction thresholds unchanged for 25 years, the need for reform is apparent.
However, Lee has fiercely criticized the ruling People Power Party (PPP) and the government for their efforts to lower the top inheritance tax rate, calling it a privileged tax cut for a handful of “the ultra-wealthy.” Korea’s top inheritance tax rate stands at 50 percent for taxable amounts exceeding 3 billion won, the second highest among OECD countries after Japan’s 55 percent. In cases where a major shareholder of a conglomerate inherits stakes, an additional 20 percent premium applies, pushing the effective rate to as high as 60 percent. Many business leaders face threats to their managerial control due to these heavy tax burdens, yet Lee has chosen to ignore this aspect of the debate.
Lee’s proposal appears to be politically calculated, likely in anticipation of an early presidential election should President Yoon Suk Yeol face impeachment. The inheritance tax debate involves more than just top rates and deductions — it encompasses various structural issues, including taxation methods. Yet, Lee has selectively focused on deduction limits, reinforcing the perception that his proposal is a populist move aimed at electoral gains. His rhetoric, which paints the government’s inheritance tax reform as a giveaway for “a handful of ultra-wealthy individuals with tens or hundreds of billions of won in assets,” is a classic example of divisive politics.
If Lee is genuinely committed to tax reform, he should move beyond electoral considerations and engage with the government and ruling party to craft a comprehensive tax overhaul. Last year, national tax revenues fell by 30.8 trillion won, and the National Assembly Budget Office projects an additional 4.8 trillion won decline by 2028. Given these fiscal challenges, a political leader should not prioritize tax cuts designed to curry favor with voters. Instead, Lee should engage in discussions on abolishing the inheritance tax surcharge for major shareholders and shifting to an inheritance acquisition tax, which would tax only the assets actually inherited by beneficiaries rather than the entire estate.
Lee has dismissed allegations that he is shifting politically rightward, stating, "I haven’t moved to the right; I’ve always been in my place." Yet, his inconsistent stance on policies — including wavering positions on applying exceptions to the 52-hour workweek under the Semiconductor Special Act and his reversal on allocating 25 trillion won for universal stimulus coupons in the supplementary budget — raises questions about his credibility. If he wants to be taken seriously, he must first abandon this pattern of political inconsistency.
Translated using generative AI and edited by Korea JoongAng Daily staff.
However, Lee has fiercely criticized the ruling People Power Party (PPP) and the government for their efforts to lower the top inheritance tax rate, calling it a privileged tax cut for a handful of “the ultra-wealthy.” Korea’s top inheritance tax rate stands at 50 percent for taxable amounts exceeding 3 billion won, the second highest among OECD countries after Japan’s 55 percent. In cases where a major shareholder of a conglomerate inherits stakes, an additional 20 percent premium applies, pushing the effective rate to as high as 60 percent. Many business leaders face threats to their managerial control due to these heavy tax burdens, yet Lee has chosen to ignore this aspect of the debate.
Lee’s proposal appears to be politically calculated, likely in anticipation of an early presidential election should President Yoon Suk Yeol face impeachment. The inheritance tax debate involves more than just top rates and deductions — it encompasses various structural issues, including taxation methods. Yet, Lee has selectively focused on deduction limits, reinforcing the perception that his proposal is a populist move aimed at electoral gains. His rhetoric, which paints the government’s inheritance tax reform as a giveaway for “a handful of ultra-wealthy individuals with tens or hundreds of billions of won in assets,” is a classic example of divisive politics.
If Lee is genuinely committed to tax reform, he should move beyond electoral considerations and engage with the government and ruling party to craft a comprehensive tax overhaul. Last year, national tax revenues fell by 30.8 trillion won, and the National Assembly Budget Office projects an additional 4.8 trillion won decline by 2028. Given these fiscal challenges, a political leader should not prioritize tax cuts designed to curry favor with voters. Instead, Lee should engage in discussions on abolishing the inheritance tax surcharge for major shareholders and shifting to an inheritance acquisition tax, which would tax only the assets actually inherited by beneficiaries rather than the entire estate.
Lee has dismissed allegations that he is shifting politically rightward, stating, "I haven’t moved to the right; I’ve always been in my place." Yet, his inconsistent stance on policies — including wavering positions on applying exceptions to the 52-hour workweek under the Semiconductor Special Act and his reversal on allocating 25 trillion won for universal stimulus coupons in the supplementary budget — raises questions about his credibility. If he wants to be taken seriously, he must first abandon this pattern of political inconsistency.
Translated using generative AI and edited by Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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