People Power Party: "Unreasonable Inheritance Tax Burdens Corporate Management and Households... Reform Needed" (Comprehensive)

"Even After Hard Work to Own a Home, Burden of Hundreds of Millions in Inheritance Tax"
Unable to Conclude on 30% Reduction of Top Inheritance Tax Rate

The People Power Party's Special Committee on Fiscal and Tax Reform pointed out the burden on businesses and households caused by the irrationality of the inheritance tax system. The committee is considering measures to adjust the inheritance tax base brackets and deduction limits to align with global standards.

Song Eon-seok, Chairman of the Financial and Tax Reform Special Committee of the People Power Party, and Kim Byung-hwan, First Vice Minister of Strategy and Finance, are taking a commemorative photo at the forum on the rational reform direction of inheritance and gift taxes held at the National Assembly on the 20th. Photo by Kim Hyun-min kimhyun81@

Song Eon-seok, chairman of the Special Committee on Fiscal and Tax Reform, said at a tax reform forum at the National Assembly on the 20th, "Experts have continuously pointed out that our country's tax system does not conform to global standards, and the inheritance tax issue has been repeatedly raised as a representative problem. Some of the issues include the OECD's highest inheritance tax rate reaching 50%, the unchanged tax base brackets for 24 years, and the deduction limit capped at 1 billion KRW for 28 years," he said.

Chairman Song emphasized, "According to a survey by the Korea Federation of SMEs, 94.5% chose the burden of inheritance tax as the biggest difficulty in business succession," adding, "Small and medium-sized enterprises with technology and know-how are choosing closure instead of succession, causing technology leakage and employment instability." He continued, "Whenever the government and the ruling party mention inheritance tax reform to solve these problems, the Democratic Party, which holds an absolute majority in the National Assembly, habitually divides the public with the frame of tax cuts for the rich and opposes it just for the sake of opposition."

Chairman Song said, "Nexon, which faced an excessive inheritance tax burden, paid the tax in stocks, resulting in the Ministry of Strategy and Finance becoming the second-largest shareholder of the game company, a bittersweet (both funny and sad) phenomenon," and added, "Many people already know that the 12 trillion KRW inheritance tax paid by Samsung Electronics after Chairman Lee Kun-hee's death is the largest in history worldwide."

The committee also discussed the burden middle-class families face when inheriting houses for their children. Chairman Song said, "With the average apartment sale price in Seoul approaching 1.2 billion KRW, most apartments in Seoul have become subject to high inheritance tax," emphasizing, "Even the house you worked hard to buy in your youth by saving and sacrificing must bear hundreds of millions of KRW in inheritance tax to pass it on to your married children." He added, "Moreover, while the average apartment price has more than doubled from 520 million KRW in 2009, the inheritance tax standards have remained unchanged for decades, only increasing the burden on the public."

Solutions considered to address the problem include ▲adjusting tax base brackets ▲expanding business succession targets ▲reexamining the surcharge on major shareholders ▲converting inheritance tax to estate acquisition tax ▲and adjusting deduction amounts.

Yoon Tae-hwa, professor of Business Administration at Gachon University, suggested at the forum, "The current flat deduction of 500 million KRW needs to be raised considering inflation and asset price increases over time," and "The current tax base brackets and rates should also be adjusted in line with increases in national income and the size of the economy."

Lee Jung-kyo, professor at Yonsei University Law School, emphasized, "South Korea has relatively high inheritance tax rates among countries that impose inheritance tax, so it needs to be lowered to an appropriate level, and the inheritance tax base brackets maintained since 2000 should be rationally adjusted," adding, "Inheritance tax should be converted to an estate acquisition tax." Estate acquisition tax refers to taxing the heirs based on the perspective that inherited property is income generated by the death of the decedent. The idea is to change to an estate acquisition tax that taxes based on how much each heir receives rather than the decedent, eliminating distortions caused by the number of children.

After the forum, Chairman Song told reporters that when asked whether the top inheritance tax rate would be reduced to 30%, "The government has never announced 30%, and Sung Tae-yoon, the policy chief of the Presidential Office, mentioned that the rate should be lowered considering the OECD average tax rate," adding, "After hearing today's discussion, it seems there are some difficulties in drastically lowering the tax rate immediately. No decision has been made."

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