저소득세액공제제도 도입의 타당성 분석

Introduction of the Earned Income Tax Credit: Its Redistributive Effects and Implemating Costs

This paper analyzes the appropriatness of introducing the Earned Income Tax Credit which has been playing major role of poverty measures in the U.S.A. Reviewing the previous researches on the EITC, we draw several senarios of introducing the EITC in Korea. Policy simulations of the senarios focus on the redistributive effects and budget cost. As the results, the EITC can provide effective support for the poor and strengthen the redistributive function for the groups above poverty line by combining the EITC with adjustments of income tax bracket and tax rates and reduction of the tax exempt amount. And EITC can reduce the budget cost burden in comparison of maintaining the current the Minimum Living Standards Security System (MLSS). Policy recommendation suggests that EITC takes over MLSS for low earners with ability to work, while MLSS only covers the low earners without ability to work. Then, unnecessary expenditure can be minimized and then welfare expenditure becomes more efficient. EITC also minimizes the administrative costs by having tax administrative to guide all other institutions attempting income scrutiny.