Suresh Narayanan: This study focuses on the July 2022 income tax revision introduced by the Korean government to reduce the tax burden of low- and middle-income households. The study sought to evaluate two facets of this move: first, its impact on the prevailing tax-benefit structure in Korea, and second, the long-term macroeconomic consequences of this move.
The authors do not tell us what motivated this focus on the effects of the income tax revisions. It was part of a wider set of tax initiatives introduced by the Korean government, and income tax accounts for only 20 percent of tax revenue. Furthermore, the government estimated revenues to decline by KRW 13.1 trillion over the next 5 years due to the revisions. By item, the expected revenues from income taxes and corporate taxes will fall by KRW 2.5 trillion and KRW 6.8 trillion, respectively, which will, in turn, account for 71 percent...