Fiscal and Administrative Feasibility

This chapter examines the fiscal and administrative feasibility of the proposed income security system, which integrates Common Wealth Dividends, an NIT-type basic income, and a Universal EITC. Utilizing microsimulation models based on the Survey of Household Finances and Living Conditions (SHFLC) and administrative tax records, the authors analyze the proposal’s budgetary implications by distinguishing between gross and net figures. The analysis reveals that while the gross benefits of the new system amount to approximately 10.2% of Gross National Income (GNI), the net benefits and net tax increases are significantly lower, estimated at roughly 4.3% and 4.0% of GNI, respectively. This reduction is achieved through the refundable tax credit mechanism, resulting in a minimal net fiscal cost of only 0.33% of GNI. Furthermore, the chapter assesses the system’s long-term fiscal sustainability in the context of South Korea’s rapidly aging population. Projections indicate that the net fiscal requirement will remain stable over time. By providing empirical evidence of a low net fiscal burden and suggesting a “dual-track” administrative operation, this chapter demonstrates that the proposed reforms are financially viable and practically executable.