More Children, Less Income Tax... Proposal for 'French-style' Tax Law Amendment Introduced

Assemblyman Kang Dae-sik Proposes Income Tax Act Amendment
Taxes Decrease as Number of Children Increases

A bill has been introduced that drastically reduces income tax based on the number of children. As South Korea's birth rate continues to decline, a tax law utilizing the French-style tax system has been proposed.

According to the National Assembly Legislative Information System on the 25th, Kang Dae-sik, a member of the People Power Party, introduced a partial amendment to the Income Tax Act on the same day (refer to the July 2nd article [Exclusive] Parents with Many Children Get 'Dramatic' Income Tax Reduction... Ruling Party Pushes France's 'N to the Power of N' Low Birthrate Measure).

The current Income Tax Act applies progressive tax rates across eight brackets, with comprehensive income ranging from 14 million KRW to 1 billion KRW as the minimum and maximum thresholds. While there are benefits through basic personal deductions and tax credits reflecting the number of children, the amounts have been criticized as insufficient.

The amendment prepared by Representative Kang fundamentally reforms the income tax system by applying tax rates differentially according to the number of children. The eight-step taxable income brackets remain unchanged, but the tax rate is reduced by 1 percentage point per child. If both spouses have income, each can receive income tax reductions based on the number of children, and adopted or foster children are also recognized as children.

This amendment is modeled after France's income tax calculation method known as the 'N to the power of N' tax system. Introduced by France in 1946 amid a low birthrate crisis, the N to the power of N method divides the family's total income by the number of household members to calculate income tax per person. The more family members there are, the lower the tax burden.

However, the amendment differs in that it uses the number of children as the criterion rather than the number of household members as in France. For income earners in the taxable income bracket below 14 million KRW, the current Income Tax Act sets a minimum tax rate of 6%, so even if divided by the number of household members, it may be difficult to apply a rate below the minimum tax rate. Previously, Park Sung-jun of the Democratic Party also proposed a partial amendment to the Restriction of Special Taxation Act similar to the French-style income tax reduction method.

The amendment was co-sponsored by a total of 10 People Power Party members: Kim Byung-wook, Kim Yong-pan, Seo Jeong-sook, Song Seok-jun, Ahn Cheol-soo, Yang Geum-hee, Eom Tae-young, Yoo Kyung-joon, Lee Jong-bae, and Lim Byung-heon. The amendment is expected to be discussed through the National Assembly's Planning and Finance Committee in the future.

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