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10.04.2014.

Income distribution and taxation in Europe


Professor Ragnar Arnason argues that Gini-coefficients are quite inadequate to measure the distribution of income. When a distinction is made between gross and net tax burdens, it becomes clear that redistributive effects of income taxation are usually much underestimated.
 
Dr. Birgir Thor Runolfsson draws attention to the index of economic freedom, which provides evidence for a strong correlation between economic freedom and the reduction of poverty.
 
Professor Hannes H. Gissurarson presents statistics suggesting that the often-repeated hypothesis that poverty was in 1991–2004 more serious in Iceland than in the other Nordic countries is not based on facts. 
 
Dr. Helgi Tomasson demonstrates that the Gini-coefficient can be the same in different countries, even if the distribution of income in those countries is very different from one another.
 
Economist Axel Hall argues that tax increases for redistributive purposes may reduce economic growth. He points out that in Iceland, a relatively high level of tax-free income combined with a relatively high first level of income taxation creates a “tax wall” or poverty trap.
 
Arnaldur Solvi Kristjansson describes in detail poverty traps that can and do form on different levels in the structure of taxes and subsidies. 
 

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