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Why a $15,000,000,000 inheritance can bankrupt you in SOUTH KOREA? - VisualPolitik EN - YouTube
Channel: VisualPolitik EN
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This man you see on the screen is LEE KUN
HEE and he is
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the first human being to be dead and alive
at the same time.
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Yes, you could say he’s something like Schroendinger’s
cat
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but in real life!
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By the time we make this video, KEE KUN
HEE will have spent more than 4 years hidden
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in a South
Korean hospital, and nobody dares to reveal
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his condition.
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And you might wonder… why?
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Who is this man?
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Well,
we’re talking about the president of SAMSUNG,
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one of the
wealthiest men on the planet.
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The day he dies, his son will
inherit between 10 and 15 billion dollars.
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And right after, he
will have to pay 65% of this fortune to the
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South Korean
Government.
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And yes, yes, I know what you might be
thinking!
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What’s the problem?
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Who wouldn’t want to have
35% of 15 billion dollars?
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Believe me, at the end of this
video, you will totally understand why his
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son isn’t happy
about this.
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And you might even admit that, yeah, you don’t
really want to know if Lee Kun Hee is dead
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or alive.
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Let’s
get started!
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Money is that thing Kanye West tries to get
rid of as soon
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as possible.
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Don’t believe me?
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Just check out this news.
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Kanye West & Kim Kardashian Spend Nearly
$1 Million On
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Gold Toilets
Exactly… a lot of people hate to have Money
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in the bank.
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But a lot of other people love Money.
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And among those who
love having Money are the billionaires.
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The wealthiest
people on planet Earth.
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Yes, this might be a very small
Group of people but it’s growing day by
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day.
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Number of billionaires worldwide surged to
2,754 in 2017
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This has an easy explanation: emerging countries.
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All of a
sudden, countries like China and Vietnam are
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starting to
have their own billionaires.
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And you might wonder… is this
good or bad news?
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Well… it depends on who you ask!
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For
example, according to Gabriel Zuckman, a marxist
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economist, this is a hell of a problem.
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And let me make a quick aside here.
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You often hear about
some sort of conspiracy theory claiming that
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the
mainstream media tries to silence all the
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critics of
capitalism, right?
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And yet, both Gabriel Zuckman and
Thomas Piketti are the new anticapitalist
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rockstars and
they’ve been on the cover of Bloomberg magazine.
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And no,
they weren’t painted as the bad guys.
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So… remember that
the next time your smartass friend shares
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their mainstream
media conspiracies!
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But let’s get back to our story.
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What’s the problem with
billionaires according to Zuckman?
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They’re destroying
social mobility.
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And what is social mobility all about?
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It’s the
academic term for the ‘American dream’.
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Think about it…
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it’s hard to go from rags to riches if you’re
competing with a
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guy who was born rich and went to the best
universities.
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According to some economists, wealth in America
is getting
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more and more concentrated in the hands of
a small elite
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group.
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Are they right or not?
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It’s hard to tell!
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In fact, there is
no way to effectively measure social mobility
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so far.
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So
there are arguments to prove both sides.
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But the truth is…
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Zuckman’s arguments are becoming more and
more
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influential.
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So today’s question is…
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Should we tax wealthy
people more?
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Are there counties that already do that?
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Does
it work?
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And what does the dead and alive Samsung
president have to do with all of this?
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Today we are going to
answer to all of these questions but, before
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we do, let’s take
a look back at the history.
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EAT THE RICH!!!
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Nobody likes tax raises.
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But, unless you’re Larry Ellison and
you’re watching this video — in which
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case, Hello Larry! —
you probably don’t get nervous at the mention
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of special
taxes for billionaires.
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Still, you might wonder… but what do
billionaires think about paying more taxes?
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Well… you
might be really surprised!
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Warren Buffett and Bill Gates agree that the
rich should pay
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higher taxes
Yes, you heard that right!
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But wait a minute because this
proposal of taxing billionaires is more complicated
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than it
seems.
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They don’t just want a higher income tax.
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We’re
talking about a wealth tax.
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And this is very important
because wealth is one thing and income is
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another.
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And
pay attention because this is the key to understanding
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the
rest of the video.
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Let’s hear Erik’s explanation!
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Let’s use Bill Gates as an example.
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He has a net worth of
around 103 billion dollars.
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But make no mistake!
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He doesn’t
have it in cash!
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If we could sneak into his bank account, we
wouldn’t see that much Money.
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So then, where is all of his
Money?
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The answer is in assets: valuable things like
houses, artwork, and, of course, Microsoft
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shares.
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This
means that, if Microsoft shares suddenly lost
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their value,
Gates’s wealth would decrease.
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And this is why anytime you hear that this
person’s net
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worth is this or that, it’s just an estimation.
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In fact, it’s really
hard to measure somebody’s wealth.
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And this is why
proposals like this generate so much debate.
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‘I have a plan’: Sen. Elizabeth Warren
discusses proposed
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wealth tax and more in Cedar Rapids
So right now, rich people in America pay taxes
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like anybody
else: whenever they get income and whenever
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they spend
it.
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But with this would-be wealth tax, they would
have to pay
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between 2 and 3% of their net worth every
year.
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Even if
they didn’t touch their Money that year.
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And yes, we aren’t
just talking about cash, but all kinds of
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assets that would
have to be valuated by some expert.
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So far, there are
already four countries that have similar taxes:
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Switzerland,
Belgium, Norway, and Spain.
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We’ll talk about those cases
in another video.
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But the truth is, there is a better formula
for taxing the rich and that’s with an inheritance
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tax.
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An
inheritance tax is the amount we would have
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to pay any
time we inherited Money.
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And it really has a similar effect to
the wealth tax.
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It’s just that, instead of paying a percentage
of your net worth while you’re alive, you
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pay it when you
die.
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Many countries and American states have this
kind of
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tax system.
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Yes, these taxes pose a big ethical debate.
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Many of you
might think this is good because you think
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it’s unfair to be
born rich.
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But many might think that it’s even more
unfair to
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end up paying more than half of the wealth
you’ve created
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to the Government.
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In many cases, if we combined all the
taxes you paid while alive plus what you pay
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when you die,
you might end up keeping a very small share
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of what you
made.
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But, again, this is a debate for other videos.
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What we
want to tell you today is what happens in
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the most extreme
case of inheritance taxation.
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And where does this take
place?
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Of course, in South Korea.
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Pay attention because
now is when our good friend, Lee Kun Hee,
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president of
Samsung, comes into the picture!
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THE SECRET OF ETERNAL LIFE
South Korea is one of the most prosperous
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countries on the
planet and this means they have a lot of very
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rich people.
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However, South Korean wealth is very different
from
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American wealth.
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In South Korea, 74% of billionaires have
inherited their fortune.
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If you’ve been subscribed to
VisualPolitik for a long time, you already
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know that the
South Korean economy is based on the so called
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CHAEBOLS.
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By the way, if you still aren’t subscribed
to VisualPolitik, you
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should be.
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Why?
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Because we give you a great worldview so
you can understand what is going on and make
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better
decisions in your life.
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Where else would you learn about
taxes in South Korea, huh?
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So go subscribe to this channel
and hit that bell button so you won’t miss
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any posts.
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And
now let’s get back to our story!
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Companies like SAMSUNG, LG, and HYUNDAI became
the
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behemoths that they are Today because of their
connections with the Government.
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And these chaebols
have something in common; they are all family
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owned
companies.
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For example, Samsung was founded by this
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man here, whose name was KEE BYUNG CHUL.
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When he
died, his son inherited the company and the
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fortune.
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His
son is our friend LEE KUN HEE.
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And the day he dies, his
son, whose name is LEE JAE YONG will inherit
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the
business.
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In fact, while the father is dead and alive
at the
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same time, he’s who’s actually in charge
of the company.
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In
other words…
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Korea is not a country where you start from
0
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like one of those Silicon Valley companies.
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This is why South Korea has the second highest
inheritance
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tax of any country, only surpassed by Japan.
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In South
Korea, you can end up paying up to 65% of
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the wealth you
inherit.
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Yes, you heard that right… you can end up
with only
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35% of your inheritance.
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And I know what you’re thinking!
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35% of a fortune is still a
fortune, right?
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In this case, the Samsung inheritance might
reach up to 15 billion dollars.
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Not bad, right?
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Well… the
problem is that we’re not just talking about
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Money here…
but also assets!
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And this is why having a billionaire dad in
South Korea can be a hell of a problem.
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Korean businesses are terrified with the punitively
high
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inheritance tax rate, which is among the highest
in the
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world.
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Think about it, this 15 billion USD is not
cash.
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Mainly, this
fortune comes from shares of Samsung.
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BUT those 7b
dollars he could end up paying will have to
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be in cash.
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In
other words, he would have to sell his father’s
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shares in the
company.
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And you might now wonder now…
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How many
shares would he have to sell?
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It depends on two factors.
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The stock price at the time the father dies
and the stock
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price at the time he wants to sell it.
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And oh boy!
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The
Samsung family couldn’t be more unlucky!
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Rumor of Samsung Group Chairman Lee Kun-hee’s
Death
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Raises Stock Prices
Exactly!
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Whether we’re talking about LG, Hyundai,
or
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Korean Air… all of their owners face the
same problems.
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But Samsung’s situation is the most incredible
of all.
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In this
case, Samsung stocks won’t stop growing.
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This means that
the son is going to inherit more and more
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wealth.
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But that
isn’t the end of the story!
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If, all of a sudden, he has to sell
such a large amount of stock… what will
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happen to the
market price?
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Of course, it will immediately drop.
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This
means that poor LEE YAE YONG can find himself
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in the
situation of getting a really small share
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of the inheritance.
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This means no Money and no Rights over the
family
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business.
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And this explains why he’s willing to do
anything
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in order to keep his father alive.
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11 months after Samsung Electronics chairman
Lee Kun-
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hee entered Samsung Medical Center following
a heart
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attack, the country’s largest business group
is maintaining a
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veil of secrecy over its leader’s health
and the future of its
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management.
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In the meantime, the Samsung son is trying
to make a deal
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with the South Korean government in order
to pay the
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inheritance tax little by little.
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But this won’t be easy.
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His
relationship with the new Korean president,
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MOON JAE IN
couldn’t be worse.
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Samsung heir sentenced to five years in jail
after corruption
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conviction
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Exactly!
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Samsung was involved in a corruption scandal
because they bribed the previous president,
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who was from
the opposing party.
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And day by day, we’re learning how this
corruption scandal was worse than we thought.
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He’ll have
to go back to court and he might lose all
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the penalty
reductions he had.
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And in the meantime Samsung stock prices
just keep growing… since 2016, they have
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doubled their
value.
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So the only solution for our friend, LEE YAE
YONG is
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to head onto the streets of Seoul and shout:
((((CASUAL
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STYLE))) ‘Please!!!!
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STOP BUYING SAMSUNG STOCKS!!!
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Why don’t you invest in something else?
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Apple?
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Hyundai?
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Cryptocurrencies?
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I mean… look, Samsung is OK, sure…
but it’s not the shit!
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Like… you’re going to end up really
disappointed!’
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Meanwhile, the Samsung patriarch has found
the secret to
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eternal life.
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SInce a heart attack sent him to the hospital
in
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2014, nobody outside of the family has seen
him.
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And he
continues to be the company’s president.
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At least on paper.
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And now you might wonder… does this inheritance
tax
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really work?
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Is South Korea a paradise of income equality?
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The truth is… not really.
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You see, despite the fact that we
can’t measure social mobility, we can measure
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equality.
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How?
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With the Gini index.
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Here we can see how South
Korea is not especially unequal, but not especially
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equal
either.
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Germany, the UK, and even the Czech Republic
are
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far more equal.
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But, of course, this is a topic for another
video.
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Now the question goes to you.
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Would you vote in favour of
a higher inheritance tax like that of South
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Korea?
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Would
you vote in favour of a wealth tax like the
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one proposed by
Elisabeth Warren?
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And… what do you think will happen to
Samsung’s president?
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Please, leave your answer in the
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comment section below.
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Also don’t forget to visit
RECONSIDER MEDIA.COM, the podcast that provided
[754]
the
vocals in this episode that were not mine.
[757]
Also subscribe to
VisualPolitik and hit that bell button.
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If you liked this video,
give us a thumbs up and, as always, I’ll
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see you next time.
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