At a seminar titled 'Economy is Democratic Party: What the Democratic Party Should Do for Realizing the KOSPI 5000 Era' held on the morning of the 29th at the National Assembly Member's Hall, Democratic Party of Korea member Lee So-young took to the microphone. Hosted by Member Kim Tae-nyeon, the seminar is an academic meeting aimed at exploring various institutional improvement measures for the 'KOSPI 5000 Era' promoted by the Lee Jae-myung government. Lee noted, "I asked to be the first to present," and spoke for about 20 minutes.
Lee mentioned the rising trend of the KOSPI index since the inauguration of the Lee Jae-myung government and presented conditions to maintain it. Issues such as corporate governance, low dividend tendencies, low PBR (price-to-book ratio), and corporate behaviors that exploit treasury stocks are points that need improvement for the KOSPI 5000 era, according to Lee.
At the same time, Lee emphasized the importance of improving systems related to dividend income. His comments were a rebuttal to recent criticisms within the ruling party regarding the proposed separation of the taxation on dividend income and the notion of it being a tax cut for the rich.
Lee said, "If benefits are given only to corporations with a dividend payout ratio of over 35%, the revenue loss for the 308 listed companies would be just over 200 billion won," adding, "If the corporations with lower dividend payout ratios increase their ratios to 35%, it can lead to increased dividends and result in distribution benefits for pension funds like the National Pension Service and individual investors." He indicated that considering the distribution effects resulting from increased dividends, there may actually be an increase in tax revenues.
Lee stressed, "The capital market is very sensitive to taxes. (The separation of dividend income taxation) has social benefits that outweigh the revenue losses," adding that to revitalize the capital market and achieve KOSPI 5000, there needs to be an appropriate balance between regulation and incentives. He emphasized that reforming dividend income taxes is indeed an incentive policy where the interests of major shareholders and regular shareholders align.
At the end of his lecture, Lee mentioned Myung In Pharm, which produces a gum treatment product. Myung In Pharm is a mid-sized pharmaceutical company where the founder and CEO, Lee Haeng-myung, 76, and his two children hold 95% of the equity. Despite having ample reserves, Myung In Pharm is pushing for a KOSPI listing in the third quarter of this year. The securities industry believes this listing is being pursued to lower the inheritance and gift tax rates. If the market capitalization decreases after going public, they can lower the tax base and use the listed stocks to pay gift taxes.
Lee pointed out, "Non-public companies pay gift taxes based on assets and revenues evaluated at fair value, while public companies only assess based on stock prices. This leads non-public companies to go public, suppress stock prices to lower gift taxes." He indicated that correcting this would help increase stock prices and actually allow for higher tax collections from the chaebols.
Recently, Lee has been in a verbal dispute with the party leadership, including Jin Seong-jun, chairman of the Policy Committee, over the separation of dividend income taxation and capital gains tax standards. When Jin criticized Lee's proposed separation as a tax cut for the rich, Lee rebutted his claims in a public lecture that day. The two also expressed opposing views on capital gains tax standards on their respective Facebook pages, continuing their argument.
Within the ruling party, evaluations of Lee's actions are mixed. Some believe it is excessive to stand out alone, while others argue that it is necessary to speak out. On the contrary, there is strong support for Lee within the securities sector. Retail investors in Yeouido see Lee as a representative of individual investors and have shown their support.
Lee maintains that he will speak out. After the seminar, he met with ChosunBiz and remarked, "If all 170 members of a party think the same, that is a bigger problem," adding, "There should be discussions like this with Jin Seong-jun. This is natural in a political party." He also mentioned that if the highest tax rate for the separation of dividend income taxation is set too high, it would negate its significance as an incentive.