[Yonhap]
[Yonhap]

A baby just over a year old earned an average of nearly 40 million won a year in interest and dividend income, newly released tax data show. More than 1,600 minors filed comprehensive income tax returns on financial income exceeding 20 million won annually, raising concerns that wealth gaps are widening from birth as assets are transferred early from parents and grandparents to the next generation.

Moon Jin-seog, a Democratic Party of Korea lawmaker on the National Assembly's Fiscal and Economic Planning Committee, obtained the data from the National Tax Service. It showed that 1,606 minors filed comprehensive income tax returns based on financial income for the 2024 tax year.

Under current tax law, individuals whose combined interest and dividend income exceeds 20 million won per year are in principle required to file a comprehensive income tax return consolidating all income sources.

The total reported income of these minors reached 166.91 billion won ($125 million). On a per-person basis, that works out to an average of about 104 million won each.

Dividend income from shares and similar assets accounted for a particularly large share of their financial earnings. Dividend income reported by the group totaled 137.68 billion won, while interest income from deposits, bonds and similar instruments came to 17.01 billion won.

Also striking is the number of infants and toddlers among those earning tens of millions of won in financial income.

Five 1-year-olds reported combined financial income of 197 million won, averaging 39.4 million won per child. Despite being far too young to engage in any economic activity of their own, these children generated substantial income solely from capital — stock dividends and deposit interest.

Among children aged 5 and under who had not yet started school, 122 were subject to comprehensive income tax filing on financial income.

The numbers grew with age. Children in the elementary school age range of 6 to 11 accounted for 424 filers, while those in the middle school bracket of 12 to 14 numbered 376. The high school age group of 15 to 17 had the highest count at 489, with 195 more at age 18.

The number of minors earning high levels of financial income has been rising year after year.

The number of minors filing comprehensive income tax returns on financial income stood at 1,327 in 2021, rising to 1,395 in 2022. It then climbed to 1,461 in 2023 and reached 1,606 in 2024, marking three consecutive years of increases.

Compared with 2021, the figure grew by 279 over three years. The pace of increase also accelerated in 2024, when the number rose by 145 from the previous year.

Financial income earned by minors likely derives in most cases not from their own labor or business activity but from cash, shares and other assets transferred from parents or grandparents. Analysts say the trend reflects the spread of a practice in which wealthy families gift shares and other financial assets to children from an early age, then grow that wealth through dividends and interest over time.

Transferring assets through proper legal gift procedures is not in itself problematic. However, experts say tax authorities need to keep closer watch for the possibility that nominee accounts held in minors' names may conceal hidden assets or irregular gift arrangements.

"The fact that minors are earning tens of millions of won in financial income is ultimately the result of parental wealth being passed down intact," Moon said. "To prevent the gap from widening too much right from the starting line, the National Tax Service needs to rigorously monitor advance gifts made in minors' names and assets held under nominee arrangements."


rainbow@heraldcorp.com