A 20-bracket comparison carried out by local media, using figures from the Ministry of Finance’s Financial Data Center, found that in 2008 income for the top 5 percent of families was a whopping 66 times that for the bottom 5 percent, double the 32.74-fold difference in 1998.
These results point up the crudity of the DGBAS’ five-level comparison. The income cutoff point for Taiwan’s top 20 percent is only about NT$1.8 million (US$56,160); in other words, in a double-income household, the salaries of two mid- to high-level public servants would put them in the highest bracket. The average person would hardly consider that to be high income, however.
Even the 66-fold difference between the highest and lowest groups in the 20-bracket analysis may be underestimated. The FDC’s data come from income tax returns, and generally speaking, truly poor people have no withheld tax to report and can expect no tax refunds, and so have no reason to file returns. The figures thus do not provide any information on society’s poorest families, and the real income gap must actually be greater.
Judging from President Ma Ying-jeou’s comment that income inequality is not too serious, it is quite likely that he does not have a complete grasp of the situation, and has been misled by his aides. Juxtaposing Taiwan’s five-bracket analysis with figures from South Korea, an East Asian country in many ways comparable to Taiwan, sheds more light on the issue.
In 2008, the ratios between the top and bottom 20 percent in Taiwan and South Korea were 6.05 and 5.74, respectively. Over the past 10 years South Korea’s ratio worsened by 0.44 percent annually, compared to Taiwan’s 1.59 percent.
Perhaps the MOF and DGBAS presented Ma with comparisons with Singapore and Hong Kong, leading to his mistaken comment. However, the president should be reminded that the uneven distribution of wealth in Taiwan can no longer be ignored.
What can be done about the growing disparity in incomes? To improve the lot of the poor, social benefits must be channeled in their direction. With regard to the highest earning households, however, the key to narrowing the gap is taxation.
In the last two years, while the Ma administration has been generous in providing subsidies for social services, it has hesitated when it comes to raising taxes on the rich. The unbalanced feeling among the middle class comes mainly from the unfair tax system.
The government must take the problem seriously, for as the French political thinker and historian Alexis de Tocqueville pointed out, when the gap between what people get and what they think they should get widens, the situation is ripe for revolution. (THN)
(This commentary first appeared in the United Daily News Aug. 29.)
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