The Samsung Group business conglomerate is large enough to account for a quarter of South Korea's total exports and has high brand value as a global company. The Samsung Group, which has several companies, including the Samsung Electronics Company, has gradually grown from Samsung C&T Corporation to become the nation’s top business group. Lee Kun-hee, who has been the chairman of these companies since 1987, passed away on October 25.
Lee, who brought Samsung to the world, emphasized the declaration of a “new management initiative”. This declaration led to the famous saying, “Let’s change everything but our wife and children”, and pushed for a major corporate revolution across all sectors of management. The business philosophy also set the goal of becoming a global first-rate enterprise that contributes to human society. Lee's advanced management system and corporate culture are said to have laid the foundation for Samsung's growth in the face of the crisis. In addition, it contributed to the development of world sports culture and programs as developing social expectations and responsibilities.
Seeing as Samsung is a huge company, there is a controversy over the inheritance tax on the property of the Chairman Lee Kun-hee. Lee held about 18 trillion won in shares. Under the current law, if the inherited property exceeds 3 billion won, the maximum inheritance tax rate of 50 percent is applied, and in the case of stocks, the tax rate will rise to 60 percent if the deceased is the largest shareholder or related person of a conglomerate. If so, the inheritance tax to be paid by the bereaved family of Lee is estimated to exceed 10 trillion won, the majority of the inheritance amount. With claims of excessive inheritance tax levels, a petition by the presidential office Cheongwadae to abolish Samsung's inheritance tax appeared on October 27. It is also alleged that the bereaved family may influence Samsung Group's governance structure by selling some shares to pay for the high inheritance taxes. As a result, the idea of lowering or abolishing inheritance tax has been proposed. This idea is based on the grounds that the burden of inheritance tax can hinder companies' free economic activities and negatively affect the national economy when they inherited companies.
There are critics that say the high inheritance tax rate encourages people to find ways to evade the tax. According to the above table, based on data from a report published by the National Assembly Research Service on June 5, 2020, Korea has one of the highest inheritance tax rates among major OECD countries.
However, some argue that the inheritance tax is appropriate given the effective tax rates. Supporters of the high inheritance tax rate claim Samsung has accumulated huge wealth while doing business in Korea so they should pay the amount as prescribed by the law. Also, they argue that the abolition of the inheritance tax is an excessive measure, given that the purpose of the inheritance tax itself is to provide "equal opportunity through the distribution of wealth" and that the government should be cautious in its decision to reduce or eliminate the inheritance tax.
▲ Comparison of the highest inherited tax rates in major OECD countries.
“The critics of the inheritance tax are demanding sweeping revisions in the face of this controversy. There are some critical opinions about the Samsung Group, whose chairman-centered responsible management has become a difficult structure to uphold due to its meticulous management. Without the sense of crisis and innovation emphasized by the late Lee Kun-hee, the Samsung Group could not have grown as much as it has. Due to the effects of coronavirus, only the close bereaved families of the deceased attended the funeral. Via the semiconductor business establishment, which Lee made the no.1 in the world semiconductor market, they went to work for the last time and laid Lee Kun-hee to rest in peace in Suwon. Lee Kun-hee passed away at the age of 78 and many people mourn him, including people in the political and financial circles.
By Kim Seong-Ju, cub-reporter email@example.com
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