And how else to do that? Raising taxes on the wealthy and corporations in order to fund an increase in minimum wage. This all seems to be done in preparation for a grander scheme to fulfill S. Korea's new left-leaning government's policy priorities, i.e promising the creation of 810k jobs. At the very least they have a game plan for S. Korea?
Under the new tax code, individual rates will increase by 2 percentage points for the two highest tax brackets, to a maximum rate of 42% for those who earn about $444,000 or more a year. Rates for individuals who earn less than $270,000 will remain unchanged.
Corporate-tax rates, meantime, will rise by 3 percentage points to 25% for companies whose net profit tops about $180 million a year. Tax rates for businesses earning less will remain the same.
Samsung Electronics Co., which paid more than $2 billion in corporate tax last year, is all but certain to pay hundreds of millions of dollars in additional taxes under Mr. Moon's plan.
Much like in the US, Moon Jae-in's approach is the left's approach in economic stimulation, in contrast to the right's favor for cutting taxes in order to stimulate business activities (which I know WSO users here also prefer!)
And so I thought it'd be interesting to note the difference between Korea's left and the US's left, namely
- If the government in current office were to increase taxes (realistically, temporarily for that term) in order to fund a minimum wage increase, how economically sound is that proposition?
In the US, the biggest divide comes from the fact that we can cut or increase taxes without any particular purpose in the money that would arise from raising taxes. Here, the taxed money would go towards individuals, basically. At the same time, the left also insist on raising the minimum wage without addressing the deficit that would result.
Moon Jae-in's solution seems to address both matters at once.
- Is S. Korea's model superior to that of the US's?