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감가상각제도와 자본소득과세 : 감각상각제도의 투자유인효과를 중심으로

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Title 감가상각제도와 자본소득과세
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Sub Title

감각상각제도의 투자유인효과를 중심으로

Material Type Reports
Author(Korean)

곽태원

Publisher

[서울]:한국개발연구원

Date 1985
Series Title; No 연구보고 / 85-05
Pages 181
Subject Country South Korea(Asia and Pacific)
Language Korean
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding KDI; KDI School

Abstract

The purpose of this study is to analyze the investment incentive effect of regulatory depreciation in Korea’s tax law by using the Effective Marginal Tax Rate Model and to establish effective investment incentive system.. Korea’s taxation incentive policy can be characterized as the backbone of its export policy in the 1960s and its heavy and chemical industry drive in the late 1970s. In the early 1970s, tax incentives for export decreased and increased for heavy and chemical industries, showing the highest tax support from 1976 until the tax reforms in 1981.

By using the Effective Marginal Tax Rate Model, based on the model introduced by D.W. Jorgenson and M.A. Sullivan, the paper estimates effective marginal tax rate by industry and types of asset from 1960 to 1983. The result shows that most of the time the effective marginal tax rate was lower than the actual tax rate and the gap between the two were larger in the late 1970s and decreased sharply after 1982. Also, it is important to note that rate fluctuations in late 1970s, which gradually stabilized in recent years; and differences in tax rate between assets are two important variables in explaining types of investments by assets. Due to the tax reform in 1981, the tax rate between industries has been alleviated, however by looking into industries in detail, there are still large gaps between industries based on whether it was supported or not.

As a result of analyzing Korea’s investment climate on revaluation of property system, the paper shows that theoretically many businesses should be receiving benefits from the current system, yet in reality, businesses have demonstrated low interest in the system. Accounting scholars argue that because of the high tax rate (currently 3%), there is low interest; however this argument seems to be unconvincing.

For the policy direction, the report suggests that regulatory depreciation should reflect composition of fixed capital, but provide investment incentive based on the policy initiative, and should be equally distributed amongst sectors. Furthermore, it recommends that complementary support for labor-intensive industry should be strengthened and rather than direct support, it needs to reinforce indirect investments such as technical development.