HOW PROGRESSIVE IS THE MOST POPULAR TAX SCHEME? THE CASE OF SOUTH KOREA

초록

Using a structural model and the 2018 Korean economy data, we show that even the individuals with relatively low income do not always prefer greater tax progressivity due to reduced economic efficiency (i.e., decrease in aggregate output and consumption) it accompanies. Hence, the counterfactual analyses reveal that the most popularly supported tax and redistribution policy in this economy does not uphold the optimal degree of progressivity for social welfare maximization and sustains about 0.31 of after-tax Gini.

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