COMPARING THE TAXATION OF THE REPUBLIC OF KOREA AND THE UNITED STATES OF AMERICA
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 manufacturing sector, as well as to finance education and local governments. The weakness of the Korean economy that led to the currency crisis in 1997, however, altered some of the 1990 reforms and objectives. The cause of the currency crisis has been identified as excessive corporate debt that totaled approximately 100 trillion won. This debt makes was in the form of insolvent loans made by and held by banks.
If a policy following market principles had been implemented to deal with the corporate loans...