The Korea Herald


20% of ‘Buffett tax’ payers salaried workers

By Korea Herald

Published : Jan. 3, 2012 - 16:19

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About 65,600 people with more than W300 million yearly income to be affected by new tax

High-paid salaried workers would make up only 20 percent of those paying the “Buffett tax,” while the others are expected to be payers of comprehensive income or capital gains tax, a government report found Tuesday.

The National Assembly on Saturday passed a controversial bill raising income taxes for the rich.

The tax is named for American billionaire Warren Buffett, who has suggested that those in his income bracket should pay more in taxes. The bill increases the income tax rate from 35 percent to 38 percent for those making 300 million won ($259,000) or more per year. 

Of the 65,623 people who reported last year to have earned 300 million won or more, 21.1 percent, or 13,895, were salary workers with their average yearly income totaling 600 million won, according to the National Tax Agency on Tuesday.

Those who reported that they paid capital gains tax or consolidated income tax accounted for 39.5 percent and 39.4 percent and their average yearly income was 480 million won and 1.03 billion won, respectively.

There were 8,866 salaried workers whose annual income ranged between 300 and 500 million won, while there were 1,281 people whose annual income exceeded 1 billion won.

Many of them, or 65 percent, were Seoul residents, followed by those living in Gyeonggi Province, Busan, South Gyeongsang Province and Ulsan. In Jeju, there were only 15 people who earned 300 million won or more.

“Considering deductions from their income, the number of ‘Buffett tax’ payers decreases to 10,146. But people for taxation could continue to increase as high-paid workers are growing every year,” a NTS official said.

The passage of the tax hike was an embarrassment to President Lee Myung-bak, who has built his policies around low taxes and deregulation.

The ruling Grand National Party, by supporting the bill, wanted to shed its image of being a party for the rich and distance itself from the unpopular president.

GNP lawmakers claimed that the tax hike will help generate additional tax revenue of 770 billion won annually.

Some critics, however, say that the tax on the rich will discourage investment and saving, impeding the nation’s economic growth.

The main opposition Democratic Unity Party had proposed to hike the tax rate to 40 percent for those earning 150 million won or more but agreed to a compromise deal.

They stayed away from the vote on Saturday in protest at the GNP’s refusal of its demand for a parliamentary probe into Lone Star Funds, a U.S. buyout firm which is seeking to sell a controlling state in Korea Exchange Bank.

By Lee Ji-yoon(