o Time : June 08, Friday 12:00 ~ 2:00 p.m.

o Venue : 9705(The 7th floor seminar room)


Marginal Effective Tax Rates in Korea : 1960-2004

Abstract

In this paper, it is attempted to measure marginal effective tax rates in Korea for the past 45 years since 1960 to evaluate Korea''s tax incentive policies. Estimation results also could be used for the comparison of the effectiveness with financial subsidies (policy loan), which has been another powerful tool to promote economic growth. Methodology used in this paper is in line with such earlier works as Jorgenson and Sullivan (1981), King and Fullerton (1983), Jorgenson and Landau (1993). It is also an extension of Hyun and Won (2000) with some differences in model and data. In Hyun and Won, only investment tax credit and special depreciation were covered in calculating marginal effective tax rates. Other major tax incentives, however, tax holiday, export loss reserve, etc., will be included in calculation. In calculating marginal effective tax rate, either (expected) price or (expected) interest rate should be estimated so that it can be included in the formula as a parameter. In Hyun and Won, fixed p (price) approach was used. In this paper, both fixed p and fixed r approach will be tried and compared.