Direct taxes rise sharply for middle class

Taxes paid by South Korea’s middle-income earners increased six times as quickly as those of the top income bracket last year, according to Statistics Korea on Monday.

The statistics bureau said that households with more than two people in the middle 20 percent by income ― the middle fifth ― saw direct taxes increase 13,200 won ($12) on average, compared to an average increase of 11,200 won for the top 20 percent of households, despite the latter group earning more than twice as much.

Direct taxes include income tax and taxes on revenues from property and business holdings.

On average, the middle tier paid direct taxes of 83,000 won each month on income of 3.92 million won, an increase of almost 19 percent.

The average for households in the top 20 percent was direct taxes of 380,000 won on income of 8.13 million won. This was an increase of 3 percent from the year before, the data showed.

Ordinary taxes or direct taxes include income and property taxes generally payable by average households.

Income rose 3.6 percent for both tiers ― increasing 280,000 won and 140,000 won for the top and middle tiers, respectively.

Direct taxes paid by households in the second-highest tier, which are also considered part of the middle-income bracket, also rose faster than taxes by the top income group. This group saw an increase of 7.4 percent in direct tax payments over the last year.

The rate of tax increases by the top group was also lower than the bottom 20 percent.

Taxes paid by households in the poorest 20 percent increased by 3.1 percent to 24,800 won on average per month last year.

The second-lowest tier saw its direct taxes increase by 4.4 percent.

Meanwhile, data by Statistics Korea last week showed that two-person households’ tax burden increased at twice the rate of their income in the first three quarters of last year.

Households’ earnings increased about 3.6 percent last year, compared to an increase of almost 6 percent for monthly tax payments.

By Park Hyong-ki (hkp@heraldcorp.com)