President Lee Jae Myung strikes the gavel during a Cabinet meeting held at the presidential office in the Blue House on July 14.NEWS1
Jang Deok-jin
The author is a professor of sociology at Seoul National University.
The essence of taxation is not a matter of how much money is collected but of democracy itself. Only after society reaches an agreement about what kinds of taxes should exist, why they should be imposed and who should bear them can the amount be debated. If the state simply takes money without such consent, it ceases to resemble a government and starts to resemble a street gang. That is the logic behind the democratic principle that there should be no taxation without representation.
Koreans, diligent taxpayers by nature, rarely revisit the lessons they learned in elementary school. Ask people why they pay taxes and most will answer with another question: Isn’t paying taxes one of the duties of citizens? They are correct. Article 38 of the Constitution defines tax payment as a civic obligation.
But the conversation can continue. Ask whether they were ever told why taxation is a duty, and silence often follows. People know they must pay but cannot explain why. Ask whether they would still accept that obligation if the government demanded half of their wealth or 70 percent of it. The silence grows longer. Then ask one final question: Would they still pay if everyone else were exempt and only they were required to contribute?
Most people react with disbelief. They may occasionally feel burdened by taxes, but they assume everyone else is paying as well. Yet what if they discovered that they alone had been carrying the burden all along?
The examples in this hypothetical conversation are not imaginary. Korea’s highest income tax rate stands at 49.5 percent. The top inheritance tax rate, once 50 percent, was lowered to 40 percent in 2024. Both remain among the highest among Organisation for Economic Cooperation and Development (OECD) nations. In some cases, the capital gains tax rate can reach 70 percent, a figure extraordinary by international standards. The notion of paying half or even 70 percent of one’s income or assets is therefore not an exaggeration but a reality.
Taxes that fall on some citizens but not others are also common. Roughly one-third of wage earners pay no income tax at all, about twice the OECD average. One in three workers contributes nothing, while the top 10 percent of earners shoulder most of the burden. Korea is thus filled with taxpayers who surrender more than half their income to taxes they barely understand while watching others pay nothing.
President Lee Jae Myung has announced plans to preside over a public debate on real estate taxes. It is difficult to understand why such a debate is necessary when the nature of Korea’s problem is already clear. Combined taxes on owning and transferring property rank fifth among OECD countries and amount to more than twice the organization’s average, making Korea a country with a particularly heavy real estate tax burden.
The president and his advisers, however, speak only of low property holding taxes while omitting transaction taxes and proposing higher levies on ultrahigh-priced homes. Presenting only selected facts distorts the truth. At a Cabinet meeting, the president even conducted a real-time online poll asking participants where the threshold for an ultrahigh-priced home should be set.
Many experts, and the OECD itself, have recommended a different approach: Lower transaction taxes and raise holding taxes. In Korea, where real estate accounts for 70 to 80 percent of household assets, such reforms would require careful design, including consideration of how quickly wealth could shift into other asset classes. Though politically unpopular in the short term, such changes could lay the groundwork for healthier public finances in the long run.
The government appears reluctant to correct Korea’s unusual inversion of high transaction taxes and relatively low holding taxes. Raising holding taxes across the board could damage electoral prospects in the next parliamentary election or complicate efforts to retain power. Instead, policymakers focus on a small number of ultrahigh-priced homes.
Taxation is fundamentally a question of democracy. The French and American Revolutions were, in part, fierce reactions against taxes imposed without proper representation. Korea must openly debate and build consensus on the reversal between holding and transaction taxes, the reduction of income tax exemptions and the country’s chronic problem of narrow tax bases and high rates.
If misguided policies continue to undermine citizens’ abilities to accumulate wealth while shifting responsibility onto a small group of diligent taxpayers, the problem extends beyond taxation itself and begins to erode democracy. The danger becomes even greater when policies are justified through hasty debates or opaque online polls lacking transparent procedures and credible methodologies.
When governments wield taxation as a political weapon, democracy suffers. At a time when Korea must prepare for fundamental changes in tax policy brought by population aging and AI, the country should not make its already politicized tax system even more fragmented. The only remedy is an awakening among taxpayers, who are also voters. Citizens must ask why they pay taxes, how much they pay and why the burden falls on them. Korea needs not compliant taxpayers, but empowered ones.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
