Should welfare go to everyone, or should it be concentrated on those most in need? This is a longstanding question surrounding social security systems. Universal welfare aims to support the basic livelihoods of all members of society, while selective welfare concentrates resources on those facing greater economic hardship. Although the two approaches are sometimes treated as opposing concepts, they can play complementary roles in maintaining the social safety net.

What Kind of Welfare Is the Earned Income Tax Credit?

The Earned Income Tax Credit (EITC) is a system with the character of selective welfare, determining eligibility based on income level. However, it is distinguished from general livelihood benefits in that it supports households with a certain amount of earned, business, or clergy income, rather than paying simply because income is low. The system primarily targets people who work yet do not live comfortably, and households that participate in the labor market but struggle to maintain a stable life on income alone.

A System Born from the Reality of the Working Poor

The EITC is grounded in the recognition that work and poverty are not necessarily opposite concepts. Getting a job does not guarantee escape from poverty, nor do long working hours guarantee adequate income. Among part-time workers, day laborers, and small-scale self-employed people, some continue economic activity yet struggle to cover basic expenses such as housing, food, and education costs. For them, the EITC serves as a mechanism supplementing income earned through labor.

EITC Income Criteria and Maximum Payment Amounts

According to the National Tax Service, the EITC payment amount is determined by household composition and income. Under current standards, a couple's combined annual total income must meet the following requirements:

• Single-person household: less than 22 million won
• Single-earner household: less than 32 million won
• Dual-earner household: less than 44 million won

The maximum payment amounts are 1.65 million won for single-person households, 2.85 million won for single-earner households, and 3.3 million won for dual-earner households. However, the maximum amount is not paid to all eligible recipients. Actual payment amounts vary depending on household type and total wages.

Asset Criteria Also Apply

The total assets of all household members must be less than 240 million won; if assets are 170 million won or more but less than 240 million won, only half of the calculated credit is paid. Assets include various items such as housing, land, automobiles, and deposits, and debts are not deducted.

Circumstances Beyond the Threshold and the Meaning of the System

These criteria are designed to concentrate limited resources on relatively low-income households. At the same time, they raise issues that arise at institutional boundaries. Households that slightly exceed the income threshold or fail to meet asset requirements cannot necessarily be assumed to live comfortably. In particular, for households with high housing cost burdens or dependents, the numbers of income and assets alone cannot fully explain the difficulties of daily life.

Therefore, rather than a system that solves labor market problems, the EITC should be viewed as a social safety net that supplements the livelihoods of households whose income from work is insufficient.

[This article is an informational piece explaining the current standards of the Earned Income Tax Credit system and its social security significance. Eligibility and payment amounts may vary depending on household type, income, assets, and review results. As applicable standards may change with future legal amendments, the latest information should be confirmed through the National Tax Service's Hometax website. Evaluations and interpretations of the welfare system reflect policy perspectives and do not definitively indicate the effectiveness of any specific policy. This article was written with the assistance of AI.]