The Korea Herald


[Editorial] Donations and taxation


Published : Sept. 4, 2011 - 19:17

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Kim Jang-hoon, a pop singer, is well known not only for his songs but his charitable giving. During the past 10 years, he has donated 11 billion won to help the unfortunate.

Despite his virtue, there is no knowing when his career as a popular entertainer will come to an end. After all, isn’t popularity ephemeral?

The singer, 43, who lives in a rented home, reportedly does not have much in savings. What will be left when he has to fend for himself in his old age? Should society return part of what it has received or turn its back on Kim?

That question is behind the ruling Grand National Party’s move to enact a “Kim Jang-hoon” law ― a law on the provision of subsidies and health care for hapless philanthropists. One of the legislation sponsors says the law would ensure state support for those aged 60 or older who do not have any means to support themselves after spending 3 billion or more on charitable giving.

Few would dispute a proposal to reward charitable donators in one way or another. Moreover, such a move will certainly encourage more donations.

However, the ruling party has yet to answer questions about eligibility ― including why the threshold amount should be 3 billion. What needs to be done for such people that are willing to donate all their wealth, a little short of the threshold amount, in return for a monthly stipend and health care? It goes without saying that this and other key questions must be addressed in the legislation process.

Another issue of great concern to the public is taxation on another type of donation ― one made to an incorporated foundation for a cause, as opposed to one made for a charitable purpose.

A case in point is a businessman’s decision to provide scholarships for students of his alma mater. For the purpose, he established a scholarship foundation and donated 21.4 billion won worth of stocks to the foundation in 2002. He was slapped a with 14 billion won gift tax bill in 2008.

The businessman, who challenged the taxation in court, is awaiting a final ruling from the Supreme Court. Undoubtedly, he is a victim of the gift tax rules designed to prevent people from transferring wealth without paying due taxes. The rules need revising to separate good apples from bad ones.