“While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.... These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.... My mega-rich friends and I have been coddled long enough by billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.” Can you guess who wrote this article? This is from a New York Times article, titled “Stop Coddling the Super-Rich” written by Warren E. Buffett, who is the current chairman and chief executive of Berkshire Hathaway. He is often introduced as a “legendary investor.” After this article was published, his argument caused lots of controversy among not only American society, but also Korean society. Nowadays, you can easily hear of the Buffett Rule from various kinds of media. Shortly, the Buffett Rule means tax increasing on the wealthy. In Korea, on December 31, the Buffett Rule passed the congress and this bill focuses on increasing the tax rate from 35% to 38% for people who pay their income tax higher than 3 hundred million won. What is your position towards the Buffett Rule?
Park Sujin, School of English ‘09
I agree with the Buffett Rule. There are several reasons for it. Firstly, Korea’s tax system is out-dated. It was regulated in 1996, and it doesn’t reflect any of the increases in prices. Current tax system imposes the same 35% of taxation to people who earn the standard 88 million won, which means one who earns one hundred million won and 10 billion won pays same rate of taxation. Secondly, comparing to other OECD countries, Korea’s tax rate is low. The average tax rate of other OECD countries is 41.7%, and Korea’s tax rate is 35.8%. Moreover, the number of people who are the subject of the Buffett Rule are about 60,000. Some people argue that 60,000 is not a big number in the whole population and thus, the increase in budget is not that much. However, the expected increase in budget is about 1 trillion won, and 1 trillion won is enough money to start a new welfare system. For these reasons, I think the Buffett Rule can solve polarization of wealth which is a chronic disease of Korean society.
Baek Juyoung, Media & Communication ‘10
Current capitalism caused so many problems to our society. For example, the gap between the rich and the poor was widened ever, and the poor are living under the basic living conditions. The government has been blaming the ideology about these problems and avoiding their responsibility to solve them. However, the government should be the one who fulfill capitalism’s deficiency. The government should always try some ways to support the poor’s side, and I think tax increasing to the rich is one of these tries. Some argue the practical effect of tax increasing to the rich is just little. In my opinion, this legislation’s signification and meaning is much more important than its practical effect. ‘99%’ of people’s distrust to the rich is quite serious and this can lead to the class war which can cause split of our society. Tax increasing to the rich can diminish 99%’s anger and help to the harmony between classes. Increasing the welfare budget or redistributing the wealth is now a global trend. People’s demand to the reconstruction of tax and welfare system is higher than ever. Now it’s time to listen the voices of majority.
Kim Hein, Korean Language & Literature ‘10
I disagree with the Buffett Rule. I don’t think polarization of wealth can be solved by this simple law. First of all, the Buffett Rule is an irrational solution. Increasing the taxation towards the rich can give psychological comfort, but its practical effect is lacking. Rather than increasing taxation towards the rich, preventing tax evasion is a better way to increase the tax income. Secondly, increase in taxation means decrease in practical usage of income. This can lead to the decrease in people’s motivation to work. Also, investment and savings will also decrease. In this way, the vicious cycle can cause economic contraction. In the case of Sweden, after the government increased the taxation to the rich, almost 200 billion, was moved abroad. I’m not saying that it is wrong to impose more taxation to the rich. I am skeptical of the real economic effect of the Buffett Rule. In Korean society, because of political power struggles, the Buffett Rule was passed without enough social compromise. In conclusion, the Buffett Rule must be reconsidered.
Kim Dahun, Media & Communication ‘10
Personally, I think freedom is more important value than equality. If people couldn’t be guaranteed their freedom, they can not fully concentrate on earning money. Of course, I think that polarization of wealth is a serious problem in our society. However, polarization of wealth is like an inevitable result of capitalism. There are many voices arguing drawbacks of current capitalism, but they always be concluded to there is no other ideologies that can substitute capitalism. If the government increases the tax to the rich, the rich would lose their own will to earn money, which led to the decrease of whole economic pie. Secondly, in Korea, awareness and image towards the rich is very negative, and I think this conception is unreasonable. The rich earn their money justifiably, by working harder than others. They have rights to be respected from the society, but they are criticized by the public for no reason. Tax increasing to the rich is just one example of these critics. In my opinion, this unreasonable conception should be changed and the government also needs to support it. Thus, I think tax increasing to the rich is unreasonable and useless legislation.
What’s After Wall Street Occupied?
After Warren E. Buffett’s argument caused many controversies in our society, it also brought a wind of change through the political world. World widely, reforming tax and welfare system is set as an electoral commitment. Many politicians argue government should be the one who leads redistribution of wealth. In the U.S.A, President Barack Obama is pushing for legislation of increasing income tax to 30% for the rich whose yearly income is more than one million dollar. Also, in France, tax increasing on the wealthy is the main topic in society. In Korea, not only the opposition parties but also conservative ruling party is promising lots of welfare pledge for the rest ‘99%.’ These changes come from people’s demand and power. On aspect of politicians now hear what people really want, these changes are welcoming. However, it is still doubtful whether all the pledges and promises can be lead to fundamental changes or just end up in temporary populism.