The Introduction of Wealth Tax and Tax Equity
Asian Tax Journal Vol. 7 No. 1 (2006), pp. 27-49
Abstract
Restructuring on overall economy has been proceeded after the 1997 economic crisis in Korea. The interest on income redistribution and equality as the difference between the rich and the poor has magnified specially after the launching of the Roh mu hyun administration. Along the request of this trend, the introduction of wealth tax, focused on income redistribution and tax equity is proposed. However, the discussion on wealth tax has been stagnant on the level of introduction of cases in foreign countries or consumptive debate on whether it is right or not. This study proposes realistic model after studying the examples of the introduction of wealth tax in foreign countries, reviews the general discussions on restrictive factors in real and positively analyse whether the introduction of wealth tax is right on the aspect of tax equity. It also indirectly verified whether the introduction of wealth tax is relevant to the policy purpose through examining the divergence of the income equity between the countries with wealth tax and the countries with no wealth tax. The result of analysis shows the meaningful negative relationship between the introduction of wealth tax and Gini coefficient. It is indirectly verified that the countries with wealth tax has low degree of income inequity compare to the countries with no wealth tax. This study concludes that the introduction of wealth tax is useful measure for alleviating the degree of income inequity and furnishes a positive material on the debate over the introduction of wealth tax.
Keywords
- wealth tax
- tax equity