“Reflecting the Cost of Living to Ease Tax Burden”
Introducing Cost of Living Adjustment to Income Tax
Doubling Basic Deduction Amount
Abolishing Inheritance Tax Between Spouses
Introducing Estate Acquisition Tax and Capital Gains Tax
Significantly Raising Financial Income Tax Threshold
Kim Moon-soo, a preliminary candidate for the People Power Party, announced tax cut policies aimed at reducing the economic burden on the middle class by easing criteria such as comprehensive income tax, inheritance tax, and integrated financial income taxation.
On the 9th, at his campaign office in Yeouido, Seoul, Kim stated, “It’s regrettable that the livelihoods of K-workers are tough due to assessment standards and deductions that do not reflect the inflation rate,” promising to introduce a cost of living adjustment to the comprehensive income tax. This aims to relieve the excessive tax burden borne by the middle class due to delayed updates in tax laws despite rising prices.
Kim also announced plans to raise the basic deduction for comprehensive income tax from the current 1.5 million won to 3 million won, the deduction for elderly people over 70 from 1 million won to 2 million won, and the disability deduction from 2 million won to 3 million won, reducing the effective tax burden on the middle class.
According to Kim’s campaign, the proportion of labor income tax in national tax revenue increased significantly from 12.4% (25.4 trillion won) in 2014 to 18.1% (61 trillion won) in 2024. A campaign official explained, “While nominal wages have risen, the assessment standards have remained unchanged since 2008, resulting in reduced real wages,” indicating that introducing a cost of living adjustment to the comprehensive income tax would have a directly beneficial impact on the tax burden relief for the working and middle classes.
The campaign also announced plans to ease inheritance taxes, with Kim stating, “We will abolish inheritance tax between spouses entirely and restructure the current estate tax system into an estate acquisition tax system. In addition, we will reform the inheritance tax into a capital gains tax system to support continuous business operations and job retention.”
The estate acquisition tax bases the inheritance tax on the property individually acquired by heirs, rather than on the entire estate, reducing the tax burden on heirs and adhering to the principle of ability-to-pay. The capital gains tax is levied when the inherited property is sold, instead of upon the death of the decedent, encouraging corporate investment and employment growth.
Kim also plans to raise the threshold for integrated financial income taxation from 20 million won to 30 million won, aiming to alleviate the economic burden on retirees who lack labor income and rely solely on financial income.
Additional policies announced by Kim’s campaign include lowering the highest corporate tax rate from 24% to 21%, tax reductions on bonuses, extending the monthly tax-exempt benefit of 200,000 won for children under six to 200,000 won per child, and excluding cars under 2000cc and electric vehicles from the individual consumption tax base.