How Progressive Is the Most Popular Tax Scheme? The Case of South Korea

Taejun Lim and Aram Kim

Hitotsubashi Journal of Economics, 2023, vol. 64, issue 1, 1-17

Abstract: 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 redistributionpolicy inthis economy does not uphold the optimal degree of progressivity for social welfare maximization and sustains about 0.31 of after-tax Gini.

Keywords: Tax Progressivity; Optimal Tax; Political Economy; Redistribution (search for similar items in EconPapers)
JEL-codes: C68 D63 H21 H23 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:64:y:2023:i:1:p:1-17

DOI: 10.15057/hje.2023001

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