Lee Jae-myung, the leader of the Democratic Party, is pushing for earned income tax reform following inheritance tax reform. The key is to raise the income tax brackets each year in line with the inflation rate. This comes four days after he announced a reduction in the inheritance tax.
The leader's tax reform is an extension of the rightward shift that abolished and deferred taxation on financial investment income and virtual asset income. This contrasts with the Democratic Party's principle of "tax justice." However, Lee, who lost the last presidential election by a margin of 0.7 percentage points, sees "tax cuts" as a strategy to attract the moderate electorate.
◇Lee: "Tax cuts for the ultra-wealthy... while salaried workers face tax increases"
Jin Sung-jun, chairman of the Democratic Party's policy committee, said on SBS radio on the 19th, "While salaried workers have their taxes withheld regularly like 'bongs,' corporations are given massive tax deduction benefits and substantial national support depending on the economic situation," adding that a proposal for earned income tax reform will be presented by the party. He stated, "There must be equity in the tax burden," and mentioned that they are exploring reform plans centered around the party's special ad hoc committee, the salaried worker defense unit (hereafter referred to as 'Wolbangwi').
Chairman Jin's remarks came a day after Lee raised concerns about the income tax system in a post titled "Is the salaried worker a bong?" on Facebook. Lee noted, "Despite nominal wages rising due to inflation, real wages are not increasing, yet taxes keep rising according to the progressive tax system. It seems that while tax cuts are given to the ultra-wealthy, in effect there has been a tax increase for salaried workers, which needs to be addressed."
The party is also preparing for a discussion session. This is to discuss the 'income tax inflation adjustment system' led by Lim Kwang-hyun, a member of the National Assembly and a secretary of the salaried worker defense unit. It will likely take place early next month and was raised as an agenda item for next week's salaried worker defense unit meeting. They plan to discuss specific issues such as how far the adjustment system should apply, in order to limit benefits for high-income earners.
◇"Not a sacred and inviolable issue... the next target is the comprehensive real estate tax"
The Democratic Party views its defeat in the last presidential election in Seoul as a result of the 'failure of the Moon Jae-in administration's real estate policy.' At that time, they lost in 14 out of 25 districts in Seoul, including Mapo, Yeongdeungpo, Dongjak, Seongdong, Gwangjin, and Gangdong. This heavily included the 'Han River Belt,' an area where housing prices surged during the Moon Jae-in administration. This is why Lee mentioned 'inheritance tax reform' on the 15th, identifying the 'majority of middle-class residents in the metropolitan area' as beneficiaries.
In this context, Lee's next move is likely to be the 'reduction of the comprehensive real estate tax.' The comprehensive real estate tax was introduced as a punitive wealth tax concept during the Roh Moo-hyun administration and is closely tied to the identity of the progressive camp.
However, since last year, there has been a growing demand to adjust policy directions, particularly in the metropolitan area. Members such as Park Chan-dae (Incheon Yeonsu-gap), Park Sung-jun (Jung-Seongdong-eul), and Ko Min-jeong (Gwangjin-eul) have openly advocated for the 'reduction of the comprehensive real estate tax.' These areas are sensitive to tax issues regardless of party affiliation. During a discussion among candidates for the party presidency, Lee commented, "The comprehensive real estate tax and financial investment tax are not sacred and inviolable issues."
In fact, the Democratic Party passed a tax reform proposal to expand the eligibility for the deferral of the comprehensive real estate tax payment during a plenary session of the National Assembly's planning and finance committee the day before. The proposal was spearheaded by Lim Kwang-hyun.
Under the current law, the deferral system for comprehensive real estate tax payment applies to those who are ▲60 years or older and own one dwelling as a single household or ▲those who have held the dwelling for five years, and applies to comprehensive real estate tax amounts exceeding 1 million won. The revised proposal includes 'couples who jointly own one dwelling' among the eligible applicants due to reasons of 'prolonged economic downturn' and 'increased tax burden.'
A member of the planning and finance committee stated, "The passage of this comprehensive real estate tax law signals that even if the Democratic Party comes to power, it will not strengthen the real estate tax system." A source from the Assembly leadership added, "Since Lee has declared a pragmatic route, he will soon present issues related to inheritance tax and income tax, noting that to win, he must give the public confidence that housing prices in Seoul will not surge even if Lee becomes president."