▪ From 2014 to 2024, while national tax revenue increased by an annual average of 5.1%, labor income tax revenue increased by an annual average of 9.2%, drawing attention.
▪ According to year-end tax settlement filing data, from 2014 to 2023 (attribution years), the number of labor income filers increased by an annual average of 2.5%, while the determined tax amount for labor income increased by an annual average of 10.0%.
▪ Causes of the steady increase in labor income tax include nominal wage increases and the progressive tax rate system.
▪ By income bracket, the increase in the number of workers earning total wages of over KRW 80M annually has driven labor income tax growth.
▪ Additionally, nominal wage increases and wage gap expansion have contributed to middle-to-upper income workers gradually moving into higher tax brackets, further amplifying the recent growth in the earned income tax.
▪ The changes in the proportion of each income bracket within the total wages nationally show that income brackets with increasing shares of total wages are gradually moving upward.
▪ Earned income tax revenue has increased due to factors including inflation, real income increases, and wage gap expansion, which led middle-to-upper income workers to move into higher income brackets with higher effective tax rates.
▪ Going forward, tax burden equity and acceptability must be enhanced by comprehensively examining the equity and burden level of the tax structure, considering inflation rates, real income growth rates, and the impact of tax burden on work incentives.