ABSTRACT
The chapter suggests that adding a tax reform option with a long-term perspective to the institutional reforms already under way in the Korean economy. Korea pursued economic stability and independent fiscal employment when it was emancipated from Japanese rule and the government was established in 1948. The Korean personal income tax system has the dual characteristics of schedular and global income taxes. Traditionally, public finance economists have placed primary emphasis on the tax policy objectives of equity and efficiency. The scheduled liberalization of Koreas trade and capital market will inevitably result in a restructuring of the country's industrial makeup. Theories on optimal taxation explore the most desirable tax structures for an economy. A tax system is largely dependent on a country's unique socioeconomic and cultural environment, which includes the technology of tax administration available and the attitudes and expectations of the tax-paying citizens.
