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Income polarization deepens

Income inequality widened over the past decade, with the gains among the top 20 percent rising by more than half while those of the poorest 20 percent more than halved, the tax agency said Monday.

Taxable income reported by the wealthiest 20 percent stood at an average of 90 million won ($83,210) in 2009, up 55 percent from 1999 when the figure was 58 million won, the National Tax Services said.

Gains among the poorest 20 percent dropped 54 percent over the same period, from 3.06 million won in 1999 to 1.99 million won in 2009.

Taxable income incorporates gains earned from private enterprises, rental businesses and interest gains.

The national prosperity since the Financial Crisis of 2008-9 was especially concentrated toward the wealthy.

Of the 90.22 trillion won of income reported by all Koreans in 2009, a 71.4 percent or 64.4 trillion won was concentrated in the top 20 percent. While the haves took up most of the gains, those between the 20th and 40th percentiles took 15 percent, or 13.53 trillion won. Those at 40th to 60th took 7.7 percent and the bottom 20 percent took a mere 1.6 percent of the total taxable income.

Economists say the government has to tackle structural imbalances in the growth chain from the current system, where wealth generation is controlled by the haves.

“The government must come up with a comprehensive plan to prevent income disparities widening by supporting smaller companies, creating jobs at the new growth sectors and strengthening the welfare system,” Yoo Byung-kyu a senior economist at Hyundai Research Institute said.

The income disparity was prevalent among the white collar workers as well.

Of 315.7 trillion won of taxable income reported by salaried workers in 2009, the top 20 percent took 41.6 percent, or 131.2 trillion won. The bottom 20 percent took less than 8 percent, or 25.2 trillion won.

By Cynthia J. Kim (cynthiak@heraldcorp.com)
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