The South Korea's Constitutional Court just ruled out yesterday that levying heavier tax on less fortunate while reducing it from the rich, who own more than two homes, is better suit to the spirit of the Korea's Constitution, pointing out it after all is a free capitalist market. How would you reckon?
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The Constitutional Court ruled Thursday that a law levying heavier taxes on high-end home owners is partly unconstitutional, vindicating President Lee Myung-bak's proposed tax cuts to boost the economy. The ruling was the first judiciary interpretation of the comprehensive real estate holding tax levied on South Korea's top 2 percent, which was implemented under the government of Lee's liberal predecessor, Roh Moo-hyun."The real estate holding law, which levies tax on a consolidated family basis, contravenes the Constitution" by discriminating married couples against unwed individuals, Lee Kang-kook, the court's chief justice, was quoted as saying by Yonhap News. The Constitutional Court also ruled a clause in the law imposing taxes on single-home owners for residential purposes not in conformity with the Constitution.The progressive tax has caused a sharp division along ideological and party lines.Seven groups of high-end homeowners, mostly from an affluent district in southern Seoul, have filed constitutional complaints since 2006, claiming the tax is unfair and overlaps with other property taxes. They claim it "violates one's property rights and the principles of a market economy and private ownership," according to documents released by the Constitutional Court.Roh levied the tax under the principle of wealth-distribution, claiming it would help the lower class and cash-strapped provincial governments and curb real estate speculation. It imposes a 1-3 percent tax on those owning property worth 600 million won ($430,137) or more.The court, however, found the family-based taxation regime, which determines the taxable amount by combining the assets of all members of a single family rather than on an individual basis, discriminates against married couples and thus is in violation of the Constitution's family values. The court said, "The protection for marriage and family lives are a much greater value than the stabilization of the real estate market or the prevention of tax evasion, which are pursued by the real estate tax law."Roh once said in a warning to conservatives that he would "make the real-estate holding law more difficult to amend than the Constitution." The Finance Ministry, which initially backed the tax under Roh, announced in September that it was changing its position and that it would now raise the minimum tax base to 900 million won and lower the tax rate to 0.5-1 percent. The move will halve the number of households subject to the surtax to 161,000 from the current 387,000.Finance Minister Kang Man-soo, perceived by many as emblematic of Korea's wealthy elite, once compared the ownership tax law to regulations imposed in Germany under Adolf Hitler, who Kang said "enacted laws with the backing of majority support."With the court's ruling, President Lee's proposed tax cuts will now gain momentum despite warnings from civic groups and opposition parties that the cuts will serve to exacerbate the nation's already-wide income gap.
