“Of the total tax cut of approximately 750 billion won, 84% will benefit the working class and middle class.”
This is what the Ministry of Strategy and Finance said when it announced the tax law revision last July. At the same time, a total salary of 78 million won (those earning less than 200% of the average wage of all workers) was presented as the standard for dividing the middle class and high earners.
However, there is a separate middle class standard used internationally. The Organization for Economic Co-operation and Development ( OECD ) uses ‘75-200% of median income.’ Those below 75% of the median income are low-income, and those above 200% are high-income. Domestic researchers also use median income to study the middle class.
Median income is a different concept from the average income previously used by the Ministry of Strategy and Finance as a standard. Median income is the median of national household income. It refers to the income in the middle after listing our country’s national income in order. For example, the average annual salary of five people earning 100,000 won, 1 million won, 10 million won, 100 million won, and 1 billion won, respectively, is 222.22 million won, but the median income is 10 million won, which the third person among the five people receives.
The median income per individual in Korea, as determined based on the Household Financial Welfare Survey jointly investigated and published by the Bank of Korea and the National Statistical Office, is 31.74 million won (as of 2021). Then, 200% of the median income is 63.48 million won. There is a difference of 먹튀검증more than 10 million won from the average wage announced by the Ministry of Strategy and Finance.
Why did the Ministry of Strategy and Finance use average wage instead of median income? Could it be that there is an intention to inflate the benefits to the working class and middle class through tax law revision? The Ministry of Strategy and Finance’s answer was, ‘It reflected the social consensus about the middle class.’
An official from the Ministry of Strategy and Finance said, “Because the low-income class does not have much of a tax burden, we analyze the tax burden by grouping them into the working class and middle class.” He added, “In the case of median income, even if 200% is applied, the annual salary is around 60 million won, but it is a social convention to classify those with an annual salary of 60 million won as high income. “We decided that it did not fit the criteria, so we applied the average wage of all workers instead of the median income,” he said.
In fact, there are survey results that show that the standards for the middle class as perceived by Korean people have increased significantly compared to the past. According to the 2022 Middle Class Report published by NH Investment & Securities, 45.6% of middle class respondents answered that they were in the lower class . It was higher than the response rate of 40.5% in the 2020 survey. The report wrote, “The standard for the middle class is usually a moderate income level, but the Korean middle class requires a stable and leisurely standard of living that goes beyond the average level of life.” Lee Young-wook, a researcher at the Korea Development Institute ( KDI
) , who published a report on ‘Current Status and Policy Tasks of Korea’s Middle Class’ in January, also said, “There is no theoretical definition of the middle class. “It depends on how you define it,” he said. He continued, “I understand that the OECD also used 150% of median income to classify the middle class, but raised it to 200% because it was lower than what we think of as the middle class standard. ”