How much tax do wage earners actually pay?

How much tax do wage earners actually pay?

The amount in national statistics, not the amount paid in theory, best reflects the economic substance. This is because it reflects all the deductions that exist in reality.

Middle-class people who earn about 55 million won will pay about 2.2 million won on average. The effective tax rate is only 4 percent.

If you earn about 100 million won, you pay about 10 million won. The effective tax rate is about 10%. It is the least paid among OECD countries. We don't actually pay as much tax as we think. Why is that?

The first is the year-end tax adjustment. The withholding tax is quite large. With this, I recognize the amount of tax I pay. However, I receive a large amount of money back for the year-end tax adjustment. The year-end tax adjustment is regarded as just a bonus

Second, because the marginal tax rate feels like the tax rate I actually pay.

Middle-class people with a marginal tax rate of usually 15%, or those with a marginal tax rate of well over 100 million won, which is about 24%, mistake me as paying about 15% or 24%.

Psychologically, the marginal tax rate is a tax payment for an additional increase in my salary, so it is reasonable. However, the proportion of my total salary to which the 15% and 24% tax rates are actually applied is very small. Even if the annual salary exceeds 100 million won, the 24% application section is not long. This is because the 24% tax rate is applied only to amounts that far exceed 100 million won. Naturally, progressive taxation is only progressive taxation in excess of the progressive amount.

In short, the marginal tax rate and the actual average tax rate I pay are different.

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Inheritance tax is said to be excessive. It is true that the maximum inheritance tax rate of more than 3 billion won in the taxation is 50%. That's why many people are mistaken as paying 1.5 billion won in tax if they inherit about 3 billion won.

However, the spouse tax can be deducted up to 3 billion won. Even if a spouse inherits 3 billion won, he or she may not pay even 1 won in taxes.

According to the actual statistics of the National Tax Service, when an inheritance of about 3 billion won is made, the actual tax paid is 500 million won on average. The effective tax rate is about 15%.

Even if you inherit 6 billion won, the effective tax rate is about 23%. About 1.3 billion won of tax will be taxed. Even if you inherit a whopping 10 billion won, the effective tax rate does not exceed 30%.  

Just because the maximum inheritance tax rate is 50%, it is as if VAT simply pays 10% tax, but inheritance tax does not simply pay 50%.