This study analyzes the effects and legal merit of global real estate tax(a.k.a. wealth tax or comprehensive property tax). Based on the simulation results, the proposed global real estate tax would violate both principle of equity in taxation and principle in property right protection, and it might cause severe controversies over unconstitutionality of high tax burden. The simulation results also reveal that the proposed tax scheme might impose tax burdens more than the gains from real estate holding on tax payers. If the tax burden exceeds 50% of the gain, this might violate the PRINCIPLES OF HALF TAXATION and might be unconstitutional. If the tax burden reaches around 70~80% of the gain, it would be confiscatory taxation, and if it gets equal to 100% of the gain, this could imply even nationalization of private property rights.

In the case of housing properties, the tax burden of the properties with market value of 5 billion Won could be more than 70% of expected income from holding them, and the tax burden increases as market value of the properties gets higher. As for the bare land, the tax burden could reach as high as 100% of expected income from holding them if market value of properties is around 30 billion Won. Thus, if the government insists on the introduction of global real estate tax, the tax rate and tax burden should be lowered significantly. In this study, we recommend that current local property tax should be changed into a flat rate tax scheme(0.3%), although it is not easy to estimate desirable tax rate.

Also, the tax bracket(housing property : higher than 0.9 billion won, bare land : higher than 0.6 billion won, land that belongs to office buildings : 4 billion Won) seems to be determined to control the number of tax payer who would be subject to the proposed tax scheme. This should be criticised harshly since it is not warranted by any taxation theory and it is hard to find any precedent in the world. This policy is just targeted a very small group of wealthy people and tax policy which is a fundamental component of national economy must not be pursued by popularism.

We have seen the abolished law of land holding limitation case, which was sentenced to unconstitutionality. This case implies that tax policy which was not based on proper logical framework nor social consensus could cause many controversies. So it is desirable to have thorough discussion on the issue and try to induce social consensus regarding this issue.

In addition, if the global real estate tax is introduced, it is better to simplify the tax scheme and to be imposed by local government rather than by central government.