The Korean Economic Forum
Policy Recommendations on the New Government’s Corporate Income Tax Reform Proposal
Hag-Soo Kim (Korea Institute of Public Finance)Year 2017Vol. 10No. 3
Abstract

This study evaluates the economic effects of the 2017 corporate income tax

reform proposal of enhancing the progressivity of corporate tax schedule with a

new highest tax rate 25%, raised by 3% points, for the tax base above 200

billion won. Although government advocates the plan with narrow impacts

limited to only about 120 largest firms, this research shows that the proposal will

cause nontrivial negative growth effects since those firms would account for at

least a half of total investment in Korea. Instead of introducing a new highest

bracket, we propose an alternative reform of a uniform proportional tax with

reduced rates for small firms and surcharges for large firms.

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