Presidential Chief of Staff Kang Hoon-sik said on the 5th that the government will push to create a "future response fund" to use additional tax revenue generated by the semiconductor boom as investment resources for future generations. It formalized the creation of a fund financed by excess tax revenue.
The United States first introduced a system of setting aside a fixed share of tax revenue under the name "rainy day fund." All 50 states run such funds, each with its own name and method. In some places, a set percentage of the budget is automatically set aside, while in others, money is saved only when there is excess tax revenue.
Many states restrict the conditions for using the fund to curb governors' pork-barrel expenditure, and some require approval from the legislature.
◇ Tens of trillions in excess tax revenue...future investment beyond designated uses 外
At a high-level ruling party-government meeting that day, Deputy Minister Kang said the government aims to make bold investments in Korea's future by creating a fund from additional tax revenue to support three mega projects, create future growth engines, respond to the K-shaped polarization, and support housing, startups, and jobs for people in their 20s and 30s by 2030.
According to the Ministry of Economy and Finance, national tax revenue from January to May was 199.9 trillion won, up 16% (27.5 trillion won) from a year earlier. Assuming that growth rate holds through year-end, national tax revenue could rise to about 434 trillion won. If realized, that would be nearly 20 trillion won more than the government's forecast for this year's national tax revenue (415.4 trillion won).
The future response fund plan is seen as an intention to set aside the increased tax revenue from an unexpected semiconductor boom as resources for future generations, rather than using it for the purposes specified under the National Finance Act. Under the National Finance Act, the consolidated surplus generated by excess tax revenue must be used in the following order: ▲ settlement of grant-in-aid (non-earmarked tax) and grant-in-aid (earmarked tax) for educational finance ▲ repayment of public funds ▲ repayment of Government Bonds.
President Lee Jae-myung said at a press conference marking the first anniversary of his inauguration last month that, regarding the use of excess tax revenue, "We must invest in a direction that serves future generations and strengthens Korea's growth potential. That is what I think." Amending the National Finance Act will likely be necessary to create the future response fund.
◇ U.S. rainy day funds total 266 trillion won...use is strictly limited
Florida was the first U.S. state to start a system of setting aside tax revenue for the future, in 1959. It spread to other states during the U.S. recessions of the 1980s. Now, all 50 states maintain a fund or account with the character of a rainy day fund, though the names differ.
According to the National Association of State Budget Officers (NASB), a U.S. states' budget consortium, the size of rainy day funds across the 50 states is $174 billion (about 266.2 trillion won) for fiscal 2025 (Oct. 1, 2024–Sept. 30, 2025).
Each state sets different rules for saving to and using the funds depending on its economic structure. For example, Texas automatically deposits 75% of oil and natural gas production tax revenue that exceeds a set threshold into its economic stabilization fund. Using the fund requires approval from the state legislature. If there is a revenue shortfall, it requires the consent of 60% of members present; otherwise, it requires 67%.
California deposits 1.5% of projected general fund revenue and any portion of capital gains tax revenue that exceeds 8% of total revenue into a budget stabilization account. Money in this account can be used only if the governor declares a budget emergency. A budget emergency can be declared when projected revenue for this year or next falls short of the expenditure level of the past three years, or when disasters such as major wildfires occur. Even if the governor declares an emergency, final expenditure is possible only after the state legislature passes a budget bill.
Connecticut requires that all income tax revenue above a certain cap be deposited into its budget stabilization fund. The deposits must basically be used when there is a budget deficit. To use them in other situations, the governor must declare a fiscal emergency and the state legislature must approve by at least 60%.