Tax data suggests wealthier individuals manage assets more through interest and dividends than deposits

Vice Finance Minister Lee Hyung-il, center, outlines key details of the 2025 tax reform plan during a briefing at the government complex in Sejong on July 29. [NEWS1]

 
The top 2 percent of earners in terms of financial income made an average of more than 2 billion won ($1.39 million) in interest and dividends in 2023.
 
Rep. Park Sung-hoon of the People Power Party, a member of the National Assembly’s Strategy and Finance Committee, disclosed the figures on Sunday. The numbers are based on National Tax Service data from 2023 filings for the comprehensive taxation of financial income.
 
 
A total of 336,246 people reported their financial income, including interest and dividends, amounting to 32.49 trillion won in 2023. That represents an average of roughly 97 million won per person, nearly double the threshold that triggers comprehensive taxation. The number of filers surged 75.6 percent from 191,501 the previous year, reflecting both rising interest rates and an investment boom in the stock market. 
 
Individuals who earned more than 50 million won in annual financial income accounted for about 6,882 people, or 2 percent of all filers. Yet this group reported 14.24 trillion won — nearly 44 percent of all financial income declared. On average, they each earned about 2.07 billion won in interest and dividends. 
 
Dividend income was dominant among top earners. For those who reported over 500 million won, dividends made up 86.6 percent — or 12.33 trillion won — of total financial income. Even among those earning between 300 million and 500 million won, dividend income was 2.8 times greater than interest income. Below 80 million won, however, interest income still exceeded dividends. For those reporting 20 million to 30 million won in annual financial earnings, dividends accounted for about one-third of the total.
 

Job seekers wait for on-site interviews and employment consultations at a job fair held at Dongdaemun Design Plaza in Jung District, central Seoul on Aug. 20. [YONHAP]

 
The data suggest that wealthier individuals increasingly manage their assets through equities and dividend-paying investments rather than bank deposits. 
 
The surge in dividend income is expected to intensify debate over the government’s plan to expand separate taxation on dividend earnings. 
 
In July, the Finance Ministry proposed a reform that would lower the top marginal tax rate on dividend income by 10 percentage points below the 45 percent top rate applied to comprehensive income.
 
Critics have called the plan a “tax cut for the rich,” while supporters argue that lower rates are needed to encourage companies to increase dividends. 
 
“Excessive taxation on dividend income is holding back companies from increasing their dividend payouts,” Rep. Park said. “To encourage stock investment and boost corporate dividends, the tax system should shift toward a more dividend-friendly approach by expanding separate taxation.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG WON-SEOK [[email protected]]