Public Recapture of Profits? Shareholders Who Bear the Risk Rightly Deserve the Reward

The semiconductor business has reached its current position through astronomical capital expenditures and R&D spending, the result of entrepreneurs’ investment decisions / If a boom is to be defined as a windfall, then society must also share the losses of a downturn / Imposing a windfall tax would weaken capacity for future investment—the funds for next-generation process investment, new R&D, and expansion of overseas bases / The owners of a company are its shareholders; “the people” have never invested capital in Samsung Electronics, so there can be no “national dividend”

Recently, Kim Yongbeom, Policy Director at the presidential office, proposed the idea of a “national dividend,” under which part of the excess profits earned by semiconductor companies would be returned to society. The presidential office explained that this was “not intended to impose a new windfall tax on corporate profits, but rather to make use of naturally increased excess tax revenue generated by the AI industry boom.” But the market reacted immediately. The KOSPI plunged 6%, and Bloomberg analyzed that Director Kim’s proposal had played a role.

On the surface, it may be framed as “using excess tax revenue,” but at the root of the idea lies the logic of a windfall tax. This is not the first time an agenda has emerged in Korean society over how, and with whom, the fruits of unexpectedly strong performance in specific industries such as real estate, finance, and semiconductors should be shared.

The idea is that because some suffered losses and others gained profits due to exogenous factors, taxation should correct that imbalance. But the moment this logic is applied to the semiconductor industry, two fundamental problems emerge.

The first problem is whether the semiconductor boom can truly be defined as a “windfall.” The original model for a windfall tax comes from the energy industry. It rests on the premise that external shocks—such as collusion by oil-producing cartels, geopolitical conflict, or political decisions—push up prices and generate profits with little additional effort.

Semiconductors are not like that. For Samsung Electronics and SK hynix to reach where they are today, astronomical sums of capital expenditure and R&D spending have been poured in over decades. Entering just one generation of advanced process technology costs tens of trillions of won, and new product categories such as HBM are the result of more than a decade of accumulated human and physical capital. The AI infrastructure boom is not a windfall that fell from the sky, but the result of a series of investment decisions made by entrepreneurs who accepted uncertainty and happened to align with market demand.

The essence of entrepreneurship is the allocation of capital under uncertainty. If memory prices had collapsed, the losses would have been borne by the shareholders who supplied the capital and by the company itself. If a boom is to be defined as a windfall, then society should also have shared the losses of a downturn. If losses are borne privately while only profits are publicly reclaimed, that is not a windfall tax but one-sided plunder.

Even if one assumes that the semiconductor boom is the result of exogenous factors, a second problem remains. Does the government really have the right to claim a dividend on those profits?

Shareholders receive dividends in return for supplying capital. They are the people who tie up their liquidity in a company even though they know that if the stock price falls, they will bear valuation losses, and if the company posts operating losses, dividends may be cut off. A dividend is compensation for risk-bearing capital, and if that compensation is not assured, no one would take the risk in the first place.

The government, by contrast, says it provides infrastructure and institutions, but it is already compensated for that through corporate taxes and various levies. The government imposes corporate tax when a company records profits, but it does not refund corporate tax when a company records losses. Losses belong entirely to capital, while profits are treated as belonging to everyone—this way of thinking ignores the asymmetry of risk-bearing. This is the very essence of predatory redistribution.

The problem is that a windfall tax does not merely strip away the company’s flesh; it also tears away its capacity for future investment. Operating profit is not simply something to be distributed. It is the source of funding for next-generation process investment, new R&D, and expansion of overseas bases. The moment it is taken away from outside, competitiveness in the next cycle is weakened accordingly. The memory semiconductor industry is highly volatile in both prices and demand, and losses incurred during downturns must also be kept in mind.

If the people are to enjoy the fruits of the AI infrastructure era, then the roots of the tree that produces those fruits must be protected first. The idea of pulling out the roots in order to share the fruit is to invite a poor harvest next year for the sake of a bumper crop this year.

In the end, the answer to who owns a company depends on who bears the risk. Shareholders supplied the capital and agreed to bear the losses. That is why they have the right to claim the residual profits. This is the simplest and most powerful principle established by the joint-stock company system.

The name “national dividend” sounds appealing. But if “the people” have never invested capital in Samsung Electronics, then they are not the rightful recipients of its dividends. The people who have supplied capital to Samsung Electronics already exist, and we call them “shareholders.” They include domestic individual investors numbering in the millions.

The owners of a company are its shareholders. Upholding the simple principle that those who bear the risk receive the reward is not about defending any particular company; it is about keeping the next cycle of prosperity in Korea.

Philip Chung, Researcher, Center for Free Enterprise (CFE)

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Original title: 이익의 공적환수? 위험을 짊어진 '주주'가 보상 받는 게 마땅하다

Author: Philip Chung

Date: 2026-05-19

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=28941