The Korea Local Administration Review

This study analyzed the effect of reforms in housing property tax on household income distribution through the Lerman-Yitzhaki decomposition of the Gini coefficient using the 13th National Survey of Tax and Benefit. Scenarios were established that reflected the Moon Jae-in government’s policy to increase the property tax burden and the Yoon Suk-yeol government’s policy to decrease the property tax burden focusing on comprehensive real estate holding tax. As a result of the analysis, it was found that while the after-tax income inequality worsened when the tax burden increased, the inequality was alleviated when the tax burden decreased. Also, it can be seen that the gap-narrowing effect acts in the direction of increasing after-tax income inequality, while the re-ranking effect acts in the direction of alleviating the inequality. The results of this study show that although the property tax system is progressive, the increase of the property tax burden can worsen the income distribution by widening after-tax income gap between homeowners and non-owners within the lower income group.