COMPARING THE TAXATION OF THE REPUBLIC OF KOREA AND U.S.

This research compares tax systems of the Republic of Korea (South Korea) and the United States of America (USA). Both individual and corporate taxes are included in the comparison, as is the underlying approach to taxation in the two countries.

The income tax is the primary revenue source at the federal level in both South Korea and the USA. The income tax in both countries is levied on the incomes of individuals, partnerships, corporations, estates, and trusts. With respect to the structure of taxation types levied at the federal level, the major difference between the two countries is the relative tax burdens of individuals as a class versus corporations as a class.

Both South Korea and the USA levy taxes on the bases of both residence and source income. Both countries levy a variety of tax types. Similarly, in both countries, taxes are levied by both the federal government and subsidiary governments.

The Korean tax system incorporates both national and local taxes, the latter of which are imposed by provinces and municipalities. Examples of local taxes include property tax, automobile tax, license tax, and registration tax. National taxes include an internet tax, custom duties, an education tax, and income taxes on both individual and corporations.

The tax reform in 1990 was intended to strengthen the competitiveness of the manufac

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much greater extent than does the USA on corporate income tax collections. At the corporate level, tax applied to taxable income is almost 87 percent higher in South Korea than in the USA. Corporations in the USA on average therefore, are able to (a) reinvest a greater proportion of earnings, (b) provide a higher level of dividends, or (c) a combination of the two than is possible on average among South Korean corporations (Hagemann, Jones, & Montador, 1998). A second approach for comparing the role and importance of corporate income taxation in the total tax structure in different countries is to state corporate income tax collections as a proportion of total income tax collections. In South Korea, total corporate income collections account for 12.9 percent of total income tax collections. In contrast, total corporate income collections account for 8.3 percent of total income tax collections in the USA. The average for OECD member states in 8.8 percent. At the same time ù 2000, the total tax burden in the USA approximated 24 percent, while the total tax burden in South Korea approximated 29 percent (Heady, 2002). The preceding information illustrated the greater dependency in South Korea than in the USA of a reliance on c
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Approximate Word count = 3536
Approximate Pages = 14 (250 words per page)