자녀세액공제의 실효성과 자녀지원의 합리적 조정방안에 대한 연구

Abstract

The biggest portion of assistances related to children is tax support in Korea. The tax support has been maintained through income tax deduction or tax credit to quite a degree, rather than paying cash. The current tax support system for children includes human deduction (basic deduction), educational expenses deduction, and child tax deduction, which are nonrefundable. The refundable support through cash payment includes child tax credit (CTC) and earned income tax credit (EITC). As child allowances were newly added in 2018, a tax law revision, by which child tax deduction application is abolished to the child allowances－subject children (6 or younger), was carried out to prevent duplicate support. However, problems on the effectiveness of the support system for children and the policy are persistently raised, because low child birth rate has been shown, despite child support size expansion and execution of various systems. This study examined earned income earners’ tax reduction and exemption benefit differences by income level according to child tax support methods, and the policy effectiveness. Through comparison between the Korean support system for children and major OECD countries’ systems, this study presents a desirable improvement direction to enhance the effectiveness of child tax support as follows: First, a method to abolish the child tax deduction, whose application ratio is low for the low income earners making KRW 40 million or less, and covert it to child allowances by which cash payment is made to child tax deduction subjects (7 to 20 years of age). Second, a method to apply refund on the underdeductible, namely, to those who did not receive child tax deduction, due to the lack of tax assessment amount of low income earners making money less than a certain amount of money. Third, a method to simplify various child support systems whose support purpose and nature are similar and duplicated through rearrangement.