Swiss reject inheritance tax on super-rich; Korea adheres to world's 2nd-highest rate
Swiss voters on Sunday decisively rejected a proposition that would have introduced a high inheritance and gift tax on the super-rich.
The youth wing of the Social Democrats put forward the "Initiative for the Future" to impose a 50 percent inheritance and gift tax on estates valued over 50 million Swiss francs ($62.1 million). The initiative proposed using the tax revenue to fund climate-related policies and address wealth inequality.
But the initiative was voted down by 78.3 percent of the electorate, who were concerned that the tax could drive wealthy individuals and companies out of the country, potentially harming the economy and reducing overall tax revenue. All of Switzerland's cantons rejected the initiative.
The vote reinforces Switzerland's reputation for economic stability and its current tax system, which has no federal inheritance tax. Voters rejected a populist proposition and kept the competitive power of their country.
The situation in South Korea is a contrast.
The very 50 percent inheritance tax, which Swiss voters rejected, is imposed in Korea on assets whose final taxable amount exceeds 3 billion won. Considering the median value of Seoul apartments is more than 1 billion won ($681 million), the rate looks excessive. Furthermore, Korea's inheritance tax ceiling, second-highest among the 38 members of the Organization for Economic Cooperation and Development, rises to 60 percent, the de facto highest in the world, when major shareholders of large companies bequeath their properties.
Even chairpersons of Korean global corporations worry about how to secure the funds to pay their enormous inheritance tax bills, which usually reach trillions of won.
Nevertheless, inheritance tax reform has made no progress in Korea, confined to an ideology of equality.
At a press conference marking 100 days in office, President Lee Jae Myung called for increasing inheritance tax deductions. Mentioning a case in which, when a landlord dies, his or her spouse and children are forced to sell their house to pay inheritance tax, Lee called the tax "too cruel." He vowed to raise the deduction limit from the current 1 billion won, which has been maintained for 28 years, to 1.8 billion won. This means that there would be no inheritance tax on property valued up to 1.8 billion won.
But the ruling party put the brakes on Lee's pledge. The Strategy and Finance Committee of the National Assembly, dominated by the governing Democratic Party of Korea, recently shelved a proposal to raise the deductible limit of inheritance tax as a long-term issue.
Inheritance tax is not simply a personal tax issue. It has a ripple effect across a national economy, including the succession of family businesses, capital accumulation, facility investments and job creation.
Heavy inheritance taxes tend to drive the wealthy and their capital out of the country. According to the 2025 wealth migration report by Henley & Partners, a UK-based global consultancy specializing in citizenship planning through investment, 2,400 affluent Koreans with more than $1 million in liquid investment assets are estimated to have emigrated this year. Their number is expected to be the fourth-largest in the world, behind that for the UK, China and India. It is also six times as many as three years ago. Major reasons include the inheritance tax burden and antibusiness atmosphere. In some cases, Korean children fail to take over their family enterprises because of the inheritance tax burden.
If South Korea keeps going against the stream amid fierce global competition to attract capital and talent through business-friendly policies, including lower taxes, its national competitiveness will weaken.
It is time to adjust inheritance tax rates down to an internationally competitive level.
Growth is the ultimate solution to economic and social problems. In a growing economy, jobs, incomes and tax revenues increase. Korea should escape from the frame of distribution and join the growth paradigm.
Wealth should not be viewed as "unfair privilege" but as "resources for growth." Onerous tax burdens should not be packaged as fairness. A change of mind is needed.
khnews@heraldcorp.com
