Iceland: Technical Assistance Report-Optimal Reform and Distributional Analysis of the Personal Income Tax

November 17, 2015

Preview Citation

Format: Chicago

Iceland: Technical Assistance Report-Optimal Reform and Distributional Analysis of the Personal Income Tax, (USA: International Monetary Fund, 2015) accessed November 23, 2024

Summary

This paper discusses key findings and recommendations of the Technical Assistance Report on Optimal Reform and Distributional Analysis of the Personal Income Tax (PIT). With regard to reforming the PIT schedule, it recommends that the basic credit be increased and made fully refundable to all taxpayers age 18 and older. To avoid paying this benefit to young singles, such as students, who generally have other means of support, it could be conditioned on a certain level of labor earnings. This credit should be rapidly phased out as labor income rises, and the initial PIT rate should be significantly reduced. The current top PIT rate does not need reform, although the threshold for that rate should ideally be raised.

Subject: Income distribution, Income tax systems, Marginal effective tax rate, National accounts, Personal income, Personal income tax, Tax policy, Taxes

Keywords: Central government, CR, Government reform, Gross income, Guaranteed annual income, Household income, Income distribution, Income tax, Income tax systems, ISCR, Marginal effective tax rate, Per capita income, Personal income, Personal income tax, Phase-out rate, Reform proposal, Tax burden, Taxable income

Publication Details

Pages:

66
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2015/315
Stock No:

1ISLEA2015004
ISBN:

9781513524047
ISSN:

1934-7685

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