Income gap narrows among workers

Korea Herald, 4 February 2003

The income gap among local salaried workers narrowed for the first time since the financial crisis in 1997, the National Tax Service (NTS) said yesterday, attributing the fall mainly to an increase in the number of middle-income earners.

According to the agency, the number of salaried workers earning 10 million won ($8478.17) and less a year rose 4.44 percent on year to 4.23 million workers in 2001. These middle-income workers have to pay 10 percent of their taxable income in income taxes.

The number of other middle-income earners with the taxable income of over 10 million won to 40 million won also rose 17.7 percent on year to 2.07 million in 2001, while those earning more than 40 million to 80 million climbed 22.2 percent to 1.1 million.

In the meantime, the number of highest-income earners, who make over 80 million won a year, remained unchanged at 21,000 in 2001. The figure was 7,000 in 1997, 8,000 in 1998 and 15,000 in 1999.

These highest-salaried workers, who are subject to the highest income tax rate of 40 percent, represented 0.3 percent of the total number of salaried workers in 2001, down from 0.4 percent in the previous year. To have a taxable income of 80 million won, a salaried worker needs to earn at least 1 billion won a year, the office said.

The number of the lowest-income earners with no taxable income after deducting various tax exemptions also declined 1.14 percent on-year to 51.1 million in 2001. The figure was 32.68 million in 1997, 3 million in 1998 and 38.7 million in 1999 and 5.17 million in 2000.

The number of those who settled income taxes in January last year came up to 11.55 million, slightly up from 11.1 million in the previous year. The figure started to fall after reaching a peak of 10.21 million in 1997, but began to rise again after hitting a low of 9.39 million in 1999.