🚨 High Earners Who Can't Build Wealth
Today Korean Economic News for Beginners | 2025.10.02
0️⃣ The Ladder to Class Mobility Blocked by Progressive Taxes and Regulations
📌 Why Even a 100 Million Won Salary Can't Make You 'Rich': The Triple Burden of Taxes, Regulations, and Benefit Exclusions
💬 The 'high-income dirt spoon' phenomenon, where people struggle to build assets despite high salaries, is getting worse. Office workers earning 100 million won per year face rapidly increasing tax burdens due to progressive taxation and rising health insurance premiums, yet they are excluded from government housing lottery, loan, and welfare benefits due to income limits. Additionally, with mortgage loan limits capped at 600 million won, buying an apartment in Seoul is practically impossible without parental support. Experts point out that "the structure blocks class advancement through labor income alone" and that "the imbalance between asset income and labor income continues to widen."
1️⃣ Easy Explanation
"I worked hard and my salary went up, so why am I still poor?" This question that many office workers have comes from structural problems in Korea's tax and welfare systems.
Let's first look at the progressive tax problem. Korea operates a progressive tax system where higher incomes face higher tax rates. For example, at a 50 million won salary the tax rate is 15%, but at 100 million won it goes up to 35% for some income brackets.
To calculate specifically: if an office worker earning 50 million won makes an extra 10 million won to reach 60 million won, they have to pay about 3 million won in taxes on that extra 10 million won. They actually take home only 7 million won. On top of that, health insurance premiums increase proportionally with income, and high earners have to pay hundreds of thousands of won extra per month.
The bigger problem is being excluded from various government benefits. Youth special supply, first-time buyer support, and low-interest policy loans - most housing-related benefits have income limits. Usually, if a couple's combined annual income exceeds 70-80 million won, they can't receive most benefits.
For example, Mr. Kim, an office worker in his 30s, earns 80 million won per year, which seems quite high before taxes. But after taxes and health insurance premiums, his take-home pay is about 5 million won per month. If he pays 1.5 million won in rent and 2 million won in living expenses, he can only save about 1.5 million won per month. Even saving 18 million won per year, it would take over 30 years to buy a 1 billion won apartment.
The mortgage loan wall is also high. Currently, mortgages are limited to a maximum of 600 million won per person. If a Seoul Gangnam apartment costs 1.5 billion won, even with a 600 million won loan, you need 900 million won in cash. This is impossible even if you save for 10 years with a 100 million won salary.
On the other hand, what about someone who inherited 1 billion won in assets from their parents? If they buy an apartment with that money, and the apartment price rises just 5% per year, they enjoy a 50 million won asset increase effect every year. Without working, their asset growth is larger than an office worker's salary.
In the end, it has become a structure where accumulating wealth through labor income alone is nearly impossible without "parent privilege."
2️⃣ Economic Terms
📕 Progressive Tax
Progressive tax is a taxation method that applies higher tax rates as income increases.
- Seven tax rate brackets are applied by income level: 6%, 15%, 24%, 35%, 38%, 40%, and 45%.
- From the 100 million won salary bracket onwards, you have to pay over 35% tax on additional income.
- While it has income redistribution effects, it's also criticized for discouraging work motivation.
📕 Tax Base
The tax base is the income amount that actually serves as the standard for taxation.
- It's the amount remaining after subtracting various deductions (personal deductions, pension premium deductions, etc.) from total income.
- Even with the same salary, the tax base differs depending on deduction items, resulting in different tax burdens.
- The higher the tax base, the higher the tax rate bracket applied.
📕 LTV (Loan-to-Value Ratio)
LTV refers to the maximum loan amount possible relative to the housing price.
- In regulated areas, LTV is currently limited to around 50-60%.
- This means to buy a 1 billion won house, you need at least 400-500 million won in cash.
- As housing prices rise, the required equity also increases.
📕 Income Limit Exclusion
Income limit exclusion means being excluded from government benefits if income exceeds a certain level.
- Most programs like youth special supply and first-time buyer special loans have annual income limits around 70 million won.
- The middle class suffers a double burden of paying high taxes but receiving no benefits.
- Complaints of "only paying taxes without receiving benefits" continue to grow.
3️⃣ Principles and Economic Outlook
✅ Progressive Tax Structure and Diminishing Marginal Utility
Let's analyze the phenomenon where the actual increase in take-home pay sharply decreases as income rises.
First, the progressive tax structure greatly increases the effective tax rate on additional income. When salary increases from 50 million won to 100 million won, income doubles but after-tax take-home pay only increases about 1.7 times. Particularly, once salary exceeds 88 million won, a 35% tax rate is applied to the excess, so even if you earn an extra 10 million won, you actually only receive 6.5 million won. Adding health insurance premiums, nearly half of the additional income disappears. This leads to a sense of helplessness that "even if I work hard and get promoted, things don't improve much."
Second, the health insurance premium burden is concentrated on high earners. Currently, health insurance premiums are levied at about 7% of income. While there is a cap, an office worker earning 100 million won pays close to 600,000 won per month in health insurance premiums. If both spouses work, one household pays over 1 million won per month in premiums. Yet the medical benefits they receive are not significantly different from low-income earners, leading to complaints that "it's not fair."
Third, satisfaction from additional income drops due to diminishing marginal utility. Economics explains that as income increases, the satisfaction from additional income decreases. When monthly salary increases from 2 million won to 3 million won, quality of life greatly improves, but an increase from 8 million won to 9 million won has much less perceived effect. Moreover, if taxes take a large portion, you feel that "even though income increases, life doesn't improve."
As the progressive tax structure and diminishing marginal utility combine, the motivation to accumulate assets among high-earning workers is weakening.
✅ Government Benefit Exclusion and Reverse Discrimination Controversy
Let's examine the problem of being excluded from various benefits once income exceeds certain limits.
First, housing-related policy loans and lottery benefits are blocked by income standards. Youth special supply is limited to couples with combined income of 70 million won or less, and first-time buyer special loans to 60 million won or less. In Seoul, if a couple each earns 40 million won, their combined 80 million won excludes them from most benefits. Paradoxically, an unemployed person who inherited 1 billion won from parents has no income and can receive all benefits.
Second, the perception that "the harder you work, the more you lose" is spreading. Online communities actually have opinions like "it's better to keep salary around 70 million won and receive benefits." If a promotion increases salary by 10 million won, you pay 3.5 million won more in taxes, lose lottery benefits, and health insurance premiums increase by 50,000 won per month, but the actual take-home increase is only about 500,000 won per month. This structure discourages work motivation and reduces economic vitality.
Third, the boundary between truly high earners and the middle class has become blurred. In the past, 100 million won salary clearly meant high income, but now with prices and housing costs so high, even 100 million won makes it difficult to buy a house in Seoul. However, policies still consider 100 million won as "rich" and exclude them from various benefits. Meanwhile, those with 1 billion won in real estate assets have no income and paradoxically receive benefits.
Income-based welfare policies operate as a structure that reverse discriminates against labor income earners.
✅ Housing Purchase Regulations and the Wall of Wealth Accumulation
Let's analyze the barriers created by loan regulations and high housing prices.
First, the 600 million won mortgage limit effectively forces "parent privilege." With Seoul apartment average prices exceeding 1.2 billion won, a 600 million won loan requires at least 600 million won in cash. Even if you earn 100 million won per year and take home 70 million won after taxes, saving 30 million won per year after living expenses would take 20 years. Ultimately, buying a house in Seoul is nearly impossible without parental gifts or inheritance.
Second, housing price increases far outpace savings rates. If an apartment that was 1 billion won in 2020 became 1.5 billion won in 2025, it rose 50% over 5 years. Almost no one's salary increased 50% over the same period. Ultimately, if housing prices rise faster than you can save, it becomes a "house you can never buy." This leads to a vicious cycle that further widens wealth gaps.
Third, even jeonse loans are blocked by regulations, leaving no alternatives. In the past, you could start with jeonse and save money to buy a house, but now even jeonse loans are difficult to get due to DSR (Debt Service Ratio) regulations. Even with a 100 million won salary, if you have credit loans or car installments, jeonse fund loans are restricted. You end up living in monthly rent, unable to save, in a vicious cycle.
Loan regulations completely block the path to wealth accumulation for those without parental assets.
✅ Widening Imbalance Between Asset Income vs. Labor Income
Let's examine the structure where the gap widens between those with assets and those who only work.
First, real estate assets create income without labor. If a 1 billion won apartment rises 5% annually, it generates a 50 million won wealth increase effect. This is similar to the after-tax income of an office worker earning 70 million won per year. Moreover, real estate capital gains are tax-free for one-home owners or subject to low tax rates, while labor income is taxed at over 35%. Even for the same 50 million won profit, the tax burden is completely different.
Second, a compounding effect operates where assets generate more assets. If 1 billion won in assets earns 50 million won per year and you reinvest it, assets grow exponentially. After 10 years it becomes 1.6 billion won, and annual earnings also increase to 80 million won. Meanwhile, for those with only labor income, salaries rarely increase 5% annually, and even when they do, tax burdens increase together.
Third, intergenerational asset transfers solidify inequality. Current people in their 60s and older bought houses when real estate prices were cheap and pass these assets to their children. While there are gift taxes, gifting 50 million won every 10 years (per child) can greatly reduce tax burden. Over 30 years, gifting 300 million won each to 2 children means transferring a total of 600 million won with almost no tax. Meanwhile, young people without parental assets must solve everything on their own.
As society transitions from labor income-centered to asset income-centered, class mobility is being blocked.
4️⃣ In Conclusion
The traditional value that "you succeed by working hard" is crumbling. The high-income dirt spoon phenomenon is not due to lack of individual effort but a structural problem where taxes, welfare, and loan regulations interlock.
The biggest problem is that progressive taxes and various benefit exclusions operate simultaneously, causing the middle class to suffer the most damage. Low-income earners receive welfare benefits and ultra-high earners have already accumulated assets, but office workers earning 70-100 million won are in a "sandwich" position, paying high taxes while receiving no benefits.
The housing purchase wall is also a decisive obstacle blocking class advancement. The gap between the 600 million won loan limit and Seoul apartment prices exceeding 1.2 billion won cannot be bridged without parental support. Ultimately, only those with "parent privilege" can accumulate assets, while those without can only live as tenants for life.
Even more serious is that the imbalance between asset income and labor income continues to expand. Those with real estate earn over 50 million won annually without working, but labor income earners find it difficult to save that much even after paying 35% taxes. If this structure continues, the gap between "gold spoons" and "dirt spoons" cannot narrow, and social mobility will continue to decline.
What are the solutions? First, the progressive tax structure must be reviewed to reduce the tax burden on the middle class. Second, welfare must shift from income-based to asset-based standards so labor income earners aren't reverse discriminated against. Third, housing loan regulations should be differentiated based on income and credit scores to open paths for diligent workers to buy homes.
Above all, we must create a "society where labor is rewarded." People who work hard and increase their income should also be able to accumulate assets for the economy to have vitality and for young generations to have hope. A society where "parent privilege" is the only solution is not sustainable.
Ultimately, the high-income dirt spoon problem is not simply a tax issue but a core challenge questioning our society's fairness and sustainability. Without institutional improvements, declining work motivation, deepening low birth rates, and social polarization will inevitably continue.
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