저성장 시대의 조세정책 방향에 대한 연구

Korea's Fundamental Tax Reform Toward 21st Century

This volume is an outcome of collaborate work by several Korean public finance economists on various issues on the tax system in Korea. During the past twelve months we have conducted in-depth analysis on various tax issues, and had regular workshop to share results and ideas. As a result, we produced ten issue papers. Though independently dealing with different issues, these ten papers share the perspective that we provide rational strategy to overcome fundamental challenges that the Korean economy is facing. Chapter 2 overviews future directions for the tax system from the long-term perspective. Key challenges of the Korean economy are rapid aging and a consequent sharp drop in economic growth rates. Considering also the ever-intensifying international competition, the long-term key object of tax reforms should be the enhancement of potential economic growth rates. Equity can be also improved with adequately rapid economic growth, and problems associated aging population can be also alleviated when the old can find a job. Chapter 3 summarizes the key issues on the fundamental tax reforms in the United States. Tax systems of the 20th century can be characterized as taxation based on income, which increasingly reveals their weakness in terms of efficiency as globalization is intensified. Fundamental tax reforms toward more growth-friendly tax systems based on the consumption tax have been seriously considered as an alternative to the current income-based system with double taxations. Chapter 4 analyzes theories and practices of flat taxes. Simplicity of flat taxes has attracted interests of many public finance economists. Recently transitional economies in Eastern Europe adopted flat taxes. Initial outcome of the introduction of flat taxes appears promising. Chapter 5 reviews roles and characteristics of value-added taxes in Korea, and evaluates recent reform measures on VAT. It examines VAT as a tool to move toward the fundamental tax reform. Chapter 6 empirically examines how the correlation between corporate tax rates and revenue changes as openness increases. It is found that the positive correlation between the tax rates and revenues become weak in a more opened economy, suggesting that keeping corporate tax rates high in open economy accompany high efficiency cost. On the other hand, the correlation between individual income tax rates and revenues does not become weaker in more opened economies. The results suggest that corporate income bases are more mobile and elastic than individual income bases are, and hence, that relatively lower corporate tax rates are optimal policies in open economy. Chapter 7 examines the income redistribution and taxes. As the economy becomes more open, the effectiveness of taxes as income redistribution tools becomes weaker and involves high efficiency cost. Chapter 8 reviews issues related to environmental taxes. Strengthening environmental taxes is a worldwide trend, and Korea cannot be an exception. We suggest that strengthening environmental elements in existing taxes is a better measure than introducing new environmental taxes. Chapter 9 reviews issues related to estate and inheritance taxes in developed countries. Estate and inheritance taxes have been criticized for their ineffectiveness in enhancing equity and their distortionary effect on saving and investment from double taxation on income. The author suggests various ways to streamline the current estate and inheritance tax system in Korea. Chapter 10 evaluates the level of fiscal decentralization in Korea by comparing the actual values with predicted values from cross-country regressions of decentralization level on its determinants, such as the size of country, the level of democratization, and corruption. Contrary to common belief that the current level of fiscal decentralization in Korea is low, the authors find that the current level is not lower than the predicted values. The authors also point out