[Op-Ed] Scrapping the Inheritance Acquisition Tax Dashes Hopes of Easing One of the World’s Highest Estate Taxes

Inheritance Acquisition Tax—Taxing People According to What They Actually Inherit—Rejected by the National Assembly, with Tax Justice Pushed Aside

The inheritance tax basic deduction limit has remained at KRW 1 billion for 28 years, while rising prices and asset values have increased the number of inheritance tax taxpayers

Inheritance tax is kicking away the ladder to the middle class; among OECD countries, only four tax the total estate

An inheritance acquisition tax, which enables healthy wealth accumulation and opens hope for upward mobility, is a task that can no longer be postponed

In March 2025, the Ministry of Economy and Finance’s ambitious push to introduce an “inheritance acquisition tax” ultimately failed to clear the National Assembly. As the Assembly rejected it on the grounds of reduced tax revenue, the truly important issue of “tax justice” was once again pushed aside in the discussion over amending the tax law.

Unlike the current estate tax system, which taxes the total value of the assets left by the deceased, an inheritance acquisition tax calculates tax based on the assets each heir actually receives. Like the gift tax, the core of this reform proposal was to reconsider fairness by shifting taxation from the standpoint of the “giver” to that of the “recipient.”

However, with tax reform blocked by the National Assembly, it is the innocent middle class that is being driven to the brink. As of December 2025, the average selling price of an apartment in Seoul surpassed KRW 1.5 billion, yet the inheritance tax basic deduction limit has been frozen at KRW 1 billion for 28 years. In effect, owning just one apartment in Seoul is enough to make an estate subject to inheritance tax.

Prices and asset values have soared, but the inheritance tax threshold has not been raised, increasing the number of inheritance tax taxpayers. Inheritance tax is no longer a tax on the rich; it has become a tax on the middle class. If tax reform does not continue, inheritance tax will degenerate into a tool that kicks away the ladder to the middle class.

The current taxation method also runs directly against global trends. Of the 24 OECD member countries that impose inheritance tax, only four—including the United States, the United Kingdom, and Denmark—are “estate tax countries” that tax the total estate, like Korea. By contrast, most advanced countries, including Japan, Germany, and France, have chosen an “inheritance acquisition tax,” under which people pay according to what they inherit.

The current system also violates the principle of tax equity, a basic principle of taxation. For example, compare an only child inheriting KRW 1 billion with five siblings inheriting a total of KRW 5 billion and each receiving KRW 1 billion. Although each individual receives the same amount—KRW 1 billion—under the current tax law, the five siblings must pay about four times more tax than the only child.

The world-leading tax rate is also problematic because it amounts to punitive taxation. Korea’s top inheritance tax rate is 50%, more than three times the OECD average of 15%. For the state to take more than half of a person’s assets at death—assets accumulated over a lifetime while paying income tax—is an excessive infringement on property rights and, in effect, double taxation.

Introducing an inheritance acquisition tax is also an effective mechanism for encouraging the dispersion of wealth. Under such a system, the more broadly assets are distributed among multiple heirs, the lower each individual’s tax base becomes, reducing the tax burden. Under the current system, the total amount of deductions is uniformly subtracted from the estate as a whole, creating the problem that one heir may effectively receive the benefit of another heir’s deduction; adopting an inheritance acquisition tax would improve the effectiveness of deductions.

Now is the time to stop using reduced tax revenue as an excuse and return to principle. When the eminently common-sense principle of “pay according to what you receive” is properly established, the public can accept the duty to pay taxes. The government and the National Assembly must come up with alternatives to offset reduced tax revenue and focus on restoring tax justice.

Above all, inheritance tax must not become an obstacle that kicks away the ladder for those seeking to rise into the middle class. It would be wrong for the original purpose of inheritance tax—mitigating excessive concentration of wealth—to be distorted into a system that denies the achievements of ordinary people who have built their lives through diligence. Reforming the tax system toward an inheritance acquisition tax—one that recognizes healthy wealth accumulation and opens hope for upward mobility—is a task that can no longer be delayed.

Subin Park, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] '유산취득세' 도입 무산, 세계 최고 수준의 상속세 국민 희망 꺾는다

Author: Su-bin Park

Date: 2026-02-26

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=28633