The purpose of this study is to analyze the causes of the income inequality and to find the improvement schemes of tax system for the elimination of the polarized income distribution in Korea. The Korean income distribution was evaluated as a relatively fair compare to other countries until 1997 years which was happened IMF financial crisis. But after that years, income distribution in Korea was gradually aggravated and become polarized distribution of income. In this paper, we also try to find the causes of the aggravation of income distribution. As a result, we recognized the causes of the polarization of income in Korea which were the lacks of the social institutions and the inadequacy of tax laws and tax system. The problems of vertical equity in the income tax is not only a matter of how heavily high-income taxpayers should be taxed. It is also more importantly a question of how little those with low incomes should pay. So, in order to the elimination of the polarized income distribution, we suggest that several improvement schemes of tax system and the reform of tax laws such as global income tax, inheritance tax and gift tax, global real estate tax system, and a plan to introduce and enact the new EITC((Earned Income Tax Credit) system for the elimination of the polarized income distribution. Besides, it needs to raise tax free minimum and to change the personal exemptions to the tax credit for low-income taxpayer's tax relief. The vanishing exemption for high-income taxpayers is required to reduce the amount of allowable itemized deductions. And this paper studied on how the new improvement schemes of tax system and the reforms of tax laws can improve the redistribution of wealth and the alleviation of polarization of Income in Korea.

The purpose of this study is to analyze the causes of the income inequality and to find the improvement schemes of tax system for the elimination of the polarized income distribution in Korea. The Korean income distribution was evaluated as a relatively fair compare to other countries until 1997 years which was happened IMF financial crisis. But after that years, income distribution in Korea was gradually aggravated and become polarized distribution of income. In this paper, we also try to find the causes of the aggravation of income distribution. As a result, we recognized the causes of the polarization of income in Korea which were the lacks of the social institutions and the inadequacy of tax laws and tax system. The problems of vertical equity in the income tax is not only a matter of how heavily high-income taxpayers should be taxed. It is also more importantly a question of how little those with low incomes should pay. So, in order to the elimination of the polarized income distribution, we suggest that several improvement schemes of tax system and the reform of tax laws such as global income tax, inheritance tax and gift tax, global real estate tax system, and a plan to introduce and enact the new EITC((Earned Income Tax Credit) system for the elimination of the polarized income distribution. Besides, it needs to raise tax free minimum and to change the personal exemptions to the tax credit for low-income taxpayer's tax relief. The vanishing exemption for high-income taxpayers is required to reduce the amount of allowable itemized deductions. And this paper studied on how the new improvement schemes of tax system and the reforms of tax laws can improve the redistribution of wealth and the alleviation of polarization of Income in Korea.

Polarization of Income, income inequality, Improvement of Tax System, low-income taxpayer, Earned Income Tax Credit