Iceland has joined a growing list of nations that have sharply cut their corporate tax rates and adopted flat-rate individual income taxes. With the expiration of a surtax last year, individuals now pay a flat rate of 22.75 percent of their taxable income to the central government.
Iceland's most dramatic reforms are in corporate taxation. The corporate income tax rate is 18 percent, which is among the lowest in the industrial world. The corporate tax rate has been cut steadily from 50 percent in the late 1980s, to 33 percent by the mid-1990s, and to just 18 percent by 2002. The rate cuts have created a powerful increase in investment incentives and boosted economic growth.
-Cato Institute
Most countries enjoy higher tax revenues after initiating a flat tax. People are more willing to pay their fair share if they feel everyone's on an equal playing field.
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