[Kangkook Lee's column] The 'National Dividend' Initiated by Chief of Staff Kim Yong-beom… Beyond Controversy to Debate

Dr. Kangkook Lee is Professor of College of Economics at Ritsumeikan University in Japan and Affiliated Research Fellow at CUKPE

On the morning of May 12, the KOSPI index plummeted by 5 percentage points in an instant. Having risen to 7,999 with the 8,000 mark in sight, the index plunged to the 7,420s before recovering to close at 7,643. While stock markets in other Asian countries also declined at a similar time due to news of a potential renewed escalation of the U.S.-Iran war, the drop in the South Korean stock market was particularly pronounced.  Bloomberg reported that the sharp decline in the KOSPI was related to a Facebook post regarding the "National Dividend " by Kim Yong-bum, Chief of the Presidential Policy Office. In the post, Chief Kim predicted that South Korean industries, which possess the capability to build AI infrastructure such as semiconductors, would be able to continuously generate excess profits through systemic transformation. Indeed, investment banks such as Nomura have recently presented a similar perspective. Chief Kim emphasized the need to consider ways to effectively utilize potential structural surplus tax revenue, naming this plan the "National Dividend." Concerns have frequently been raised that while rapid technological advancements like AI will bring enormous profits to giant tech companies, many workers may lose their jobs or face hardships. Director Kim argued that in response to these changes, we must consider ways to utilize the substantial tax revenue generated from the excess profits of technology companies based on monopolies for the benefit of the community. He proposed specific measures such as supporting youth startups and artists, as well as expanding the basic pension, and emphasized that debates regarding these issues must continue to develop.

 Misunderstanding or distortion by Bloomberg and the conservative media

Regarding this, South Korea's conservative media extensively reported that he had proposed a "citizen dividend" to return excess profits from semiconductor companies. Conservative politicians raised their voices, claiming that his argument was socialist—in which the government arbitrarily reclaims corporate profits to hinder free business activity—and revealed the true colors of the Communist Party. Bloomberg, a U.S. financial news outlet, labeled Chief of Staff Kim's idea a "citizen dividend" in an article originating from Korea and noted that his proposal had caused anxiety among investors. South Korean media outlets then picked up and reported this article verbatim.

However, such media reports appear to be a misinterpretation or distortion. This is because Chief Kim’s writing contained absolutely no mention of additional tax increases on semiconductor companies or the recouping of a portion of their profits; it merely called for the initiation of discussions on how to utilize the increased tax revenue. Yet, the opening sentence of the initial Bloomberg report stated that Chief Kim had written, “The Korean government should distribute a portion of AI profits to all citizens.” Furthermore, Bloomberg initially titled the article “Korea Roils Market by Floating 'Citizen Dividend' from AI Tax” but later revised it to “... AI gains,” a title that was misleading in itself. This is because such titles sound as if they implied a tax on the AI ​​industry or dividends from the profits of AI companies. Chief Kim later clarified that his writing was not about imposing a new windfall tax on corporate profits, but rather about utilizing the increased tax revenue. Bloomberg subsequently revised the article title to include only “AI,” and the current title reads, “Korea Stocks Gyrate as Top Aide Floats AI 'Dividend'.” Instead of 'by,' which implies causality, 'as,' which implies time, was used, and it was clarified that the article was written by the Chief of Policy regarding excess tax revenue. However, since articles serviced through the 'Bloomberg Terminal' appear earlier than on the website, the incorrect title may have influenced foreign investors.

It is nothing new for the domestic conservative media to cunningly distort the remarks of politicians or government officials in order to attack a progressive administration. In that respect, Chief Kim’s writing leaves something to be desired. He wrote in the beginning that excess profits in the AI ​​era must be returned and social stability achieved, yet he mentioned the issue of excess tax revenue only in the latter part. In particular, the word "dividend" should have been used with caution, considering that it typically refers to capital gains obtained in the form of dividends when holding corporate stock. Of course, he likely used the term "national dividend" metaphorically, but if translated into English as "dividend," it can sound different from his intention.

 The idea of ​​a citizen dividend

In fact, the ' citizen dividend' is a concept primarily associated with basic income, referring to the distribution of profits to citizens in the form of dividends based on the perspective that society's shared wealth, such as natural resources or data, belongs to the community. For example, Alaska's Permanent Fund has been providing basic income to residents since 1982, based on oil revenues. Meanwhile, Norway's sovereign wealth fund was established using oil revenues from the North Sea oil fields, and the fund is building a foundation for future finances through capital gains generated by owning stakes in global companies.

The idea of ​​a "citizen dividend" has also been proposed by Western leftists. Varoufakis, a progressive politician who served as Greece's Finance Minister, proposed a "universal dividend ," suggesting that when companies issue new shares, a certain portion be contributed to a government-owned fund, and the dividends generated from that government stake be distributed to citizens. He argued that such a universal dividend is more effective than a tax-based basic income in the current climate where the economic power of Big Tech companies is growing. When the Biden administration in the U.S. provided subsidies to technology companies in strategic industries such as semiconductors for industrial policy, progressives also argued that the government should own shares in the companies and reclaim profits in the form of dividends. This was because there was strong criticism that while governments in developed countries previously provided bailouts, subsidies, and tax cuts to companies in distress, profits were privatized while the costs were borne by society. If Chief of Staff Kim's idea involves returning capital gains generated from corporate equity ownership to society in the form of dividends, it is significant in itself and worth discussing. This policy likely aligns with the views of President Lee Jae-myung, who previously supported basic income.

However, given that his writing did not actually express such progressive ideas, the conservatives' attack on the National Dividend idea—claiming it to be socialism that undermines the free market economy—can be considered an intentional distortion. Of course, it would have been better if he had exercised sufficient caution regarding certain expressions, and the Chief of Policy should also give serious thought to posting unrefined ideas on social media. While it is refreshing and desirable for a key government figure to strive for active communication, it can inadvertently trigger unnecessary controversy and conflict.

 How to Spend Excess Tax Revenue in the AI ​​Era

Nevertheless, his proposal, which he termed the "National Dividend," carries significant meaning. It can be viewed as a monumental question: "How will society share the fruits of the AI ​​technological revolution?" In the West as well, there is growing criticism that the massive profits of so-called Big Tech giants are closely linked not only to innovation but also to rents derived from their monopolistic positions. Consequently, while there are arguments for imposing taxes such as a robot tax or a global wealth tax on billionaires , corporations counter that such taxes would hinder innovation. Furthermore, there are strong calls to strictly regulate their monopolistic status out of concern over the expansion of political power based on these companies' excessive profits. In particular, given that the advancement of AI and robots could cause hardship for workers and intensify polarization, the proposal to utilize tax revenue derived from the massive profits of technology companies to stably manage this transition process is something we should all take to heart.

Of course, it remains to be seen whether the AI ​​industry will continue to enjoy a sustained boom without a bubble collapse as he envisions, allowing Korean companies to continue earning massive profits. However, it is highly likely that tax revenue will significantly increase over the next few years, driven by the enormous operating profits of semiconductor companies. If the AI ​​boom persists, Samsung Electronics is projected to generate operating profits of approximately 320 trillion won this year, 430 trillion won in 2027, and 490 trillion won in 2028, while SK Hynix is ​​expected to record 270 trillion, 400 trillion, and 480 trillion won, respectively. The operating profits of these two companies alone are expected to reach approximately 2,000 trillion won over three years. Consequently, corporate tax revenue from these two companies alone will reach 120 trillion won in 2027, bringing the total corporate tax revenue to approximately 200 trillion won—more than double the estimated 101 trillion won for 2026. Even if the projected corporate tax revenue is increased in the budget, there is a high probability of a tax surplus. According to the current National Finance Act, the government can formulate a supplementary budget after using excess tax revenue collected above the budget in the order of local government grants, settlement of local education finance grants, repayment of public funds, and repayment of national bonds; however, in reality, excess tax revenue was often used as a source for the supplementary budget through revenue adjustments.

Chief Secretary Kim’s central concern is to consider uses for these significantly increased or surplus tax revenues that differ from existing fiscal spending or government debt repayment. For instance, he suggested the possibility of supporting startups or culture, moving beyond public job creation programs or expanded welfare spending. Furthermore, a sovereign wealth fund could be established using a portion of the surplus to invest in AI-related industries, with the dividends generated from those investments serving as a source for future fiscal spending. Additionally, one could consider using these funds to expand the social safety net to counter the impact of technological innovation and to create a fund to support the employment of young people facing difficulties finding jobs due to AI. Going further, there is also the possibility of the government reclaiming a portion of public investments or tax breaks provided to technology companies under industrial policy—specifically in the form of equity—and receiving dividends if the companies generate substantial profits. Such discussions hold great significance not only for Korea but for the entire world standing on the brink of a technological revolution. I hope that the "National Dividend" idea launched by Chief Secretary Kim will move beyond distorted controversies and evolve into a debate involving citizen participation.

(This article was originally published as a column in Hankyoreh in Korean and translated into English with the help of Google Translate. The views expressed in this article are those of the author(s) and do not represent the official stance of the center.)