(by guest blogger, Andy Jackson)
It would seem that Korea’s tax code is about to get a little more progressive (Yonhap):
In a speech to the nation, Roh said government revenue should be raised to address deepening income disparity, and rejected calls by opposition parties for tax reductions…
…Given the worrisome trends in income distribution, few would dispute that priority should be given to reducing the income gap, according to experts.
The top 20 percent of the population in terms of income had 5.18 times the income of the bottom 20 percent in 2002, according to a government report. The figure increased to 5.41 two years later.
"The president’s remarks are basically accurate at the moment, but the problem is that they can have a negative impact on the economy in the long run," said Kim Kwang-doo, a professor at Sogang University. "What is important is how to raise money to fund the social welfare system."
In the States, there would certainly be a dispute over whether flattening income levels should be a priority in making economic policy, but I guess the writer is of the European school.
I was hearted by the line the GNP took:
The main opposition Grand National Party (GNP), which insisted on an 8.9-trillion-won (US$9.01 billion) cut in the 2006 government budget, is criticizing the president and the ruling camp’s move.
Lee Bang-ho, the GNP’s chief policy coordinator, called for a "growth-driven policy," claiming a tax increase would inevitably result in slow economic growth.
The party insists that a more corporate-friendly environment will ultimately solve the problem of social polarization, and that increased corporate investment will lead to more jobs, resulting in an increase in people’s income and consumption.
Here we have a legitimate conservative argument against a legitimate liberal argument (that would be liberal vs socialist for you European readers). What I did not see was anyone throwing around "supporters of dictators" or "closet supporters of Kim Jong-il’s system." That is certainly a welcome relief.
My two cents: I am not a fan of income distribution per se. It punishes productivity and slows the economy growth that eventually helps everyone. On the other hand, a little income redistribution can be a good short-term fix to aid those who find themselves on the short end of market fluctuations (which are a normal part of the free-market system).
But my main reason for supporting things like a progressive income tax is that it gives the poor something to lose, which helps make for a more stable society. A stable society is good business.
2 Comments
“Here we have a legitimate conservative argument against a legitimate liberal argument (that would be liberal vs socialist for you European readers). What I did not see was anyone throwing around “supporters of dictators” or “closet supporters of Kim Jong-il’s system.” That is certainly a welcome relief.”
Well, don’t hold your breath, and keep the alka seltzer handy!
One of the obstacles to the implementation of an effective conservative tax moderation policy is the absence of anything remotely resembling genuine anti-trust policy/enforcement in Korea. The business oligarchy doesn’t want it for obvious reasons; the far-left would rather nationalize business; and both the Roh-Nothings and the GNP are doing nothing, because, in the latter case, doing so would gut their traditional base and turn off the money spigot, and in the former case, doing so would turn off the money spigot and result in a backlash among the huge swing element of their constituency when Big Biz raised the bugbear of an economic slowdown.
Koreans just copy the Japanese system. And, since I do not believe the Japanese do much of income redistribution, Korea will not do this either regardless of what Rho says.
Income redistribution is an American idea and comes from Christianity. Americans believe the middle class is the backbone of National security. Therefore, we take from the rich and give to the poor.
No other country, and definitely no Asian country, will do this. Asian philosophy is basically, “Why am I my brother’s keeper”?
Somethings are not possible in non-Christian countries. They will be polite and friendly. But, when it comes to giving money to the poor, they say “no”. The Japanese society is a good example.