The gap between the growth rates of earned income and prices has widened to the largest extent since the financial crisis. As workers' salaries have slowed for two consecutive years, consumer prices have surged.
According to data submitted by the National Tax Service to Lee Kwang-hyun, a member of the Democratic Party, during a meeting of the National Assembly's Planning and Finance Committee on the 30th, the recently compiled average earned income per capita for 2023 (the year of income) was 43.32 million won. This represents a 2.8% increase compared to a year ago (42.13 million won). This is lower than the average growth rate of 3.6% over the past 10 years.
During the same period, prices continued to rise significantly. The consumer price index for 2023 increased by 3.6% compared to the previous year. With salaries increasing less than prices, the gap between the growth rates of earned income and prices was recorded at -0.8 percentage points (p). This marks a second consecutive year of negative figures, following -0.4 p in 2022. The increase in earned income lagged behind the increase in prices for the first time since 2022 and before that, since 2009 (-2.0 p).
The overall tax burden on earned income earners in 2023 appears to have decreased compared to the previous year. The average calculated tax amount per person for 2023 was 4.28 million won, a decrease of 60,000 won (-1.4%) compared to the previous year. This change was influenced by adjustments to the tax brackets for the lower two brackets for those earning less than 50 million won made by the National Assembly and government in 2022.
However, the effect of tax burden relief was concentrated among the highest income earners. Among earned income earners, the average calculated tax amount per person in the top 0.1% income bracket, comprising 20,852 individuals, was 333.290 million won, representing a decrease of 18.36 million won (-5.2%) compared to the previous year. In contrast, the average calculated tax amount per person in the median 50% income bracket, with 208,523 individuals, increased by 0.9% to 2.92054 million won.
Lee Kwang-hyun noted, "The income growth rate of 20 million earned income earners is weakening, and the negative gap in real income, which reflects purchasing power considering prices, is further widening," emphasizing that "we need to focus on tax and fiscal policy that supports income improvement for earned income earners."