From Iceland — Taxes On Highest Income Bracket Increase

Taxes On Highest Income Bracket Increase

Published June 11, 2012

Icelanders earning the most money have seen their tax rate nearly double between 2007 and 2010.
In an article written by economist Páll Kolbeins for Tíund, the magazine of the national tax office, he points out that most people are paying less tax now than they were in 2007. However, when a progressive tax system was adopted in 2009, the top 1% income earners in Iceland saw things change for them significantly.
In 2007, these top income earners paid about 14% in income tax, while the lowest bracket paid 38%. In 2010, the top 1% saw their tax rate increase to 33%; an increase of 138%.
As a result, disposable income for the country as a whole decreased by a third – however, it should be pointed out that for most people, the decrease in disposable income was about 13% to 17%, while for the top 10% income bracket, the decrease was by about 54%.
The article also contends that with the creation of the so-called “wealth tax”, 59 Icelandic families have had to sell off some of their assets or pay out of their disposable income in order to fully pay their taxes. Combined, these families had some 30 billion ISK in assets, and owed about 830 million ISK all together – put another way, each family had on average over half a billion ISK in assets, and owed on average just over 14 million ISK each.

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