Soaring Number of Zero-Age Dividend Income Earners... "The Butterfly Effect of Moon Administration's Tax Law Revisions"

Minor Real Estate Rental Income Rises
"Wealth Inheritance, Inequality Deepens"

The number of minor real estate rental income earners and stock dividend income earners has been increasing every year.

According to data received on the 17th from the National Tax Service by Kim Ju-young, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, the number of minor dividend income earners surged in 2021 following 2020, with the number of 0-year-old dividend income earners confirmed to have more than tripled compared to the previous year.

The "0-year-old dividend income earners," who received stocks as gifts immediately after birth, increased sharply from 2,439 in 2020 to 7,425 in 2021, more than tripling. This is a 33-fold increase compared to just 219 four years earlier. In 2018 (372) and 2019 (427), the number did not exceed 500, but it increased 5.7 times in just one year entering 2020, entering a rapid growth phase.

This appears to be aimed at the tax-saving effect that occurs when assets expected to appreciate in value, such as stocks or real estate, are gifted to children in advance, as the appreciation in value is attributed to the children. Based on a 10-year period, adult children are exempt from gift tax up to 50 million KRW, and minor children up to 20 million KRW. This results in a difference of about 10 million KRW.

Additionally, the National Tax Service cited the tax law revision announced in January 2021 as the reason for the surge in minor dividend income earners in 2020. Previously, only one of gift tax or income tax needed to be paid, but starting in 2021, the tax law revision announced that both gift tax and income tax must be paid, leading to stock gifting before the law change.

Minor real estate rental income has also steadily increased. The number of minor landlords rose steadily from 2,415 in 2017 to 3,136 in 2021, an increase of about 30% (721) over five years.

Furthermore, the total rental income earned by minors from 2017 to 2021 was confirmed to be 271.634 billion KRW. By year, it was ▲50.419 billion KRW in 2017 ▲54.886 billion KRW in 2018 ▲55.881 billion KRW in 2019 ▲55.618 billion KRW in 2020 ▲54.830 billion KRW in 2021.

Most minor landlords rented commercial properties. As of 2021, among 3,136 minor landlords, 2,820 rented commercial properties. In particular, minor rental income earners in the Seoul area earned an average annual rental income of about 20 million KRW.

Rep. Kim emphasized, "The inheritance of wealth and income inequality are worsening every year," and added, "Redistribution for fair competition is a core aspect of tax policy, so I will examine whether there are any gaps in related systems."

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