Advertisement

Population Aging and Tax Policy in Korea

  • Kiseok HongEmail author
Chapter

Abstract

Korea has long been considered a country with relatively stable public finances compared to other major countries. However, due to the shrinking tax base after years of low economic growth and the increasing need for welfare spending, concerns are rising about the nation’s long-term fiscal sustainability. Also, the accelerating pace of population aging is expected to exacerbate fiscal pressures. Considering these structural changes and the relatively low tax burden in Korea, it seems inevitable that the tax rate will be raised by a substantial margin in the future. An important question, then, is which tax to raise. Against this backdrop, this study attempts to examine what impact population aging may have on the nation’s taxation structure and to draw implications for the direction of future tax reforms.

References

(In Korean)

  1. Chang. 2009. The analysis of pension reform and tax reform under population ageing. National Assembly Budget Office.Google Scholar
  2. Cheon, Y., and S. Choi. 2006. The effects of tax reforms: an analysis using a computable general equilibrium model. In Korea’s fundamental tax reform toward 21st centuryed. by T. Kwak. Korea Economic Research Institute.Google Scholar
  3. Choi, L., and B. Cheon. 2003. Fiscal implications of aging and inter-generational redistributive effects of fiscal policy. Korea Institute of Public Finance.Google Scholar
  4. Hong, K. 2013. Population aging and the determination of tax structure, mimeo. Korea Institute of Public Finance.Google Scholar
  5. Kim, S. 2006. A general equilibrium model of tax policy evaluation in Korea: tax incidence analysis. Korea Institute of Public Finance.Google Scholar
  6. Kim, S., and W. Kim. 2007. The marginal efficiency cost of taxation in Korea: an econometric approach. Korea Institute of Public Finance.Google Scholar
  7. Nam, J., G. Lyu, and H. Choi. 2005. The current status of job-insecure workers and the employment policy issues. Korea Labor Institute (In English).Google Scholar

(In English)

  1. Aiyagari, R. 1995. Optimal capital income taxation with incomplete markets, borrowing constraints, and constant discounting. Journal of Political Economy 103 (6): 1158–1175.CrossRefGoogle Scholar
  2. Auerbach, A.J., and L.J. Kotlikoff. 1987. Dynamic fiscal policy. Cambridge: Cambridge University Press.Google Scholar
  3. Chamley, C. 1986. Optimal taxation of capital income in general equilibrium with infinite lives. Econometrica 54: 607–622.CrossRefGoogle Scholar
  4. Conesa, J.C., S. Kitao, and D. Krueger. 2009. Taxing capital? Not a bad idea after all!. American Economic Review 99 (1): 25–48.CrossRefGoogle Scholar
  5. Fehr, H., and F. Kindermann. 2015. Taxing capital along the transition-not a bad idea after all? Journal of Economic Dynamics and Control 51: 64–77.CrossRefGoogle Scholar
  6. Imrohoroglu, S. 1998. A quantitative analysis of capital income taxation. International Economic Review 39 (2): 307–328.CrossRefGoogle Scholar
  7. Judd, K. 1985. Redistributive taxes in a simple perfect foresight model. Journal of Public Economics 28: 59–83.CrossRefGoogle Scholar
  8. Mankiw, G., and M. Weinzierl. 2006. Dynamic scoring: a back-of-the- envelope guide. Journal of Public Economics 90 (8–9): 1415–1433.CrossRefGoogle Scholar
  9. Mateos-Planas, X. 2010. Demographics and the politics of capital taxation in a life-cycle economy. American Economic Review 100 (1): 337–63.CrossRefGoogle Scholar
  10. Miles, D. 1999. Modelling the impact of demographic change upon the economy. The Economic Journal 109: 1–36.CrossRefGoogle Scholar
  11. Nishiyama, S., and K. Smetters. 2005. Consumption taxes and economic efficiency with idiosyncratic wage shocks. Journal of Political Economy 113 (5): 1088–1115.CrossRefGoogle Scholar
  12. Park, Y. 2012. Optimal taxation in a limited commitment economy. In PIER working paper archive 12-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.Google Scholar
  13. Razin, A., E. Sadka, and P. Swagel. 2004. Capital income taxation under majority voting with aging population. Review of World Economics 140 (3): 476–495. (In English).CrossRefGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2019

Authors and Affiliations

  1. 1.Ewha Womans UniversitySeoulSouth Korea

Personalised recommendations