Top 20% Pay 90% of Global Income Tax

Last year, of the people who paid the Global Income Tax, or GIT (taxation on aggregate income), the wealthiest 20 percent accounted for 90.1 percent of the total GIT. It is the first time that the GIT rate of the top 20 percent has surpassed 90 percent.

According to the National Tax Service (NTS), the aggregate income of the top 20 percent who were confirmed to have paid the GIT as of last May was 34.219 trillion won, or 69.9 percent of the total GIT amounting to 49.1798 trillion won.

The GIT paid by the top 20 percent was 6.2529 trillion won, or 90.1 percent of the total GIT (6.9438 trillion won).

In 2003, the aggregate income of the top 20 percent comprised 68.4 percent, amounting to 88.9 percent of the GIT.

Last year, the aggregate income of the bottom 20 percent comprised 1.9 percent with a GIT burden rate at 0.21 percent, however, a decrease of 0.3 percent and 0.19 percentage points, respectively.

Researcher Kim Jae-jin at the Korea Institute of Public Finance (KIPF) said, “The lower-income class suffers even more amid the overall economic difficulties,” adding, “With the smaller income of the lower-income class, those of the upper-income class have presumably increased.”

As more companies offer wages based on employees’ performance, the number of high-income earners has increased.

Based on 2004’s year-end tax adjustment, the number of income earners whose standard of assessment for the earned income tax was more than 80 million won was 41,000, accounting for 0.66 percent of the total number of earned income taxpayers (6.268 million people).

This is up from 28,000 in 2002 (0.4 percent) and 31,000 in 2003 (0.5 percent).

Keuk-In Bae bae2150@donga.com