Improving fiscal accountability of tax expenditure: the case of the Earned Income Tax Credit in Korea

YoungWook Lee

Chapter 6 in Fiscal Accountability and Population Aging, 2021, pp 118-135 from Edward Elgar Publishing

Abstract: The Earned Income Tax Credit, a tax expenditure program to support the working poor in Korea, has continually expanded since its introduction in 2008. This study examines the interconnections between the EITC and other transfer programs, which can create income reversals with marginal tax rates reaching up to 125% and can result in lower income when a household exits the program. Tax and direct expenditure programs are independently managed by different ministries and need to be reviewed comprehensively. To improve fiscal accountability in tax expenditure, the overall effectiveness of tax and direct expenditures should be jointly evaluated, and micro-level data on tax and direct expenditure programs should be linked to common policy objectives.

Keywords: Asian Studies; Economics and Finance (search for similar items in EconPapers)
Date: 2021
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