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Redistributive effect of Korea's income tax: equity decomposition

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  • Jin Kwon Hyun
  • Byung-In Lim

Abstract

The redistributive effect of Korea's income tax is relatively low as it has too low an average tax rate irrespective of high progressivity. The most serious problem is the excessively high level of horizontal inequity with unequal tax treatment of equal income groups. By examining changes over three research periods (1991, 1996, 2000), it was discovered that horizontal inequity with classical notion was the most serious in 1996 as it allowed extremely generous deductions and exemptions at that time. It is illustrated that Korea's income tax system can have a greater redistributive effect while increasing the level of horizontal equity.

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  • Jin Kwon Hyun & Byung-In Lim, 2005. "Redistributive effect of Korea's income tax: equity decomposition," Applied Economics Letters, Taylor & Francis Journals, vol. 12(3), pages 195-198.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:3:p:195-198
    DOI: 10.1080/1350485042000323703
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    References listed on IDEAS

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    1. Plotnick, Robert, 1981. "A Measure of Horizontal Inequity," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 283-288, May.
    2. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    3. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo.
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    1. Kinam Kim & Peter J. Lambert, 2009. "Redistributive Effect of U.S. Taxes and Public Transfers, 1994-2004," Public Finance Review, , vol. 37(1), pages 3-26, January.
    2. Mario Morger & Christoph A. Schaltegger, 2018. "Income tax schedule and redistribution in direct democracies – the Swiss case," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(3), pages 413-438, September.
    3. Maria Giovanna Monti & Simone Pellegrino & Achille Vernizzi, 2015. "On Measuring Inequity in Taxation Among Groups of Income Units," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(1), pages 43-58, March.

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