Current Status and Improvements of Korea's Inheritance and Gift Tax System

A country's tax system is quite different depending on the country's history, culture, politics, economy, and social background, and the differences are inevitable. The function and role of inheritance tax and the content of the tax system may vary depending on the circumstances of each country, such as the degree of wealth concentration and social awareness of transparency in the process of wealth accumulation, so it is not possible to conclude that one is better than the other. Meanwhile, Korea's inheritance and gift tax system currently faces several important issues and challenges. First, the fairness and balance of the tax rates and coverage of inheritance and gift taxes is debated. Some families with large inheritances may use tax avoidance schemes to avoid paying the higher tax burden. In addition, gift taxes provide tax incentives for intergenerational wealth transfers, which may lead to excessive wealth growth and wealth imbalances. Under these circumstances, we need new approaches and improvements for the fair and efficient imposition of property taxes. And in the case of Korea, the logic of strengthening the inheritance tax system is dominated by the negative public sentiment that wealth has been accumulated in an abnormal way during the course of economic development. Nevertheless, empirical results in most countries that have a gift tax system show that strengthening the gift tax system alone is not enough to ensure equal economic opportunity through wealth distribution. Therefore, there has been a long-standing debate on whether to retain or abolish the gift tax system. Some countries have abolished the inheritance tax system and switched to the capital gains tax system, and this study examines the current status and issues of inheritance tax in major countries abroad, and examines the current status and issues of inheritance tax in Korea to provide a direction for reforming the inheritance tax system in Korea. Lastly, in this study, we explored a method of taxing inheritance and gifts, which have the same characteristics as taxation of intergenerational transfers of assets, in a single tax system. As suggested in overseas cases, the inheritance and gift tax should be maintained, and in order to promote the principle of functional burden and the transfer of assets, the inheritance tax system, which is an estate tax system, should be integrated into the inheritance acquisition tax system like the gift tax system. If the inheritance acquisition tax method is adopted, it is highly likely that inheritance division will be promoted, and furthermore, disguised division of inheritance may become a problem, so it is necessary to prepare for this.