Assemblyman Kim Hoe-jae, "Youth Employment Rate Worsened More During 2009-2017 When Corporate Tax Rates Were Lower"

Assemblyman Kim Hoe-jae Requests National Assembly Legislative Research Office to Analyze Correlation Between Corporate Tax Rate and Youth Employment Rate

"Higher Corporate Tax Rates Actually Show Higher Youth Employment Rates"

[Yeosu=Asia Economy Honam Reporting Headquarters, Reporter Choi Cheol-hoon] A report from the National Assembly Legislative Research Office revealed that youth employment indicators worsened during the period when the corporate tax top rate was low. The analysis showed that the higher the top rate, the higher the youth employment rate.

According to the results of the "Analysis of the Correlation between Corporate Tax and Youth Employment Rate," commissioned by Kim Hoe-jae, a member of the Democratic Party of Korea (Jeonnam Yeosu-si Eul), the youth employment rate (ages 15-29) was lower during the period from 2009 to 2017, when the nominal top corporate tax rate was at its lowest at 24.20% (including local income tax), compared to before and after that period over the past 20 years.

The corporate tax top rate and youth employment rate were analyzed to have a positive correlation. In other words, the higher the top rate, the higher the youth employment rate.

However, the Legislative Research Office cautioned that the sample size was small at 22 and that correlation does not imply causation between the two variables.

For example, when the nominal top corporate tax rate was 30.80% (in 2000), the youth employment rate was 43.4%, but when the nominal top corporate tax rate was 24.20% in 2010 and 2015, the youth employment rates were 40.4% and 41.2%, respectively.

On the other hand, when the nominal top corporate tax rate rose to 27.50% in 2018, the youth employment rate was 42.7%. The youth employment rate increased to 43.5% in 2019 and 44.2% in 2021.

From 2018 to 2021, the nominal top corporate tax rate was maintained at 27.50%.

In 2020, the youth employment rate slightly declined to 42.2%, which is presumed to be due to the impact of the COVID-19 pandemic.

Rep. Kim Hoe-jae said, "It has once again been revealed that the outdated trickle-down theory of the Yoon Seok-yeol administration, which aims to create jobs through tax cuts for the wealthy, is an illusion," adding, "As benefits are given to the rich, it is highly likely that the middle class and ordinary citizens will bear the burden."

He continued, "What the people need amid high inflation, high interest rates, and high exchange rates is not baseless optimism relying on tax cuts for the wealthy, but visible support measures for ordinary citizens," emphasizing, "A shift in tax policy awareness is necessary, such as expanding the Earned Income Tax Credit paid to low-income households."

Rep. Kim Hoe-jae previously introduced a partial amendment bill to the Restriction of Special Taxation Act in December last year to introduce a price-indexed Earned Income Tax Credit system.

Rep. Kim explained the reason for the bill, stating that as high inflation continues, low-income groups are likely to be excluded from the Earned Income Tax Credit payment targets despite nominal income increases due to inflation without real wage growth, and that a price-indexed Earned Income Tax Credit system should be introduced to expand the payment targets according to inflation.

Yeosu=Asia Economy Honam Reporting Headquarters, Reporter Choi Cheol-hoon hss79@asiae.co.kr

This content was produced with the assistance of AI translation services.