Abstract
The personal income tax rate was modified 25 times in its 60 years of existence. However, policymakers largely missed opportunities to make systematic changes. The progressive function has to be manually adjusted due to its fixed nominal thresholds. As a result of the insufficient reforms of the past, the tax rates for taxable income increase rapidly and earners reach the top income tax rate is reached rather early. Still, both the minimum and the top tax rate are today lower than they were decades ago. Against this background, we recommend implementing a systematic adjustment to the tax thresholds. The current government proposals are not very ambitious in this regard.
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