ICELAND'S SUPPLY-SIDE LESSONS FOR CANADA

In Globe and Mail, Neil Reynolds emphasizes Iceland's supply-side corporate and individual income tax reductions which helped to turn a small island in the north of the Atlantic ocean into the fifth richest country in the world.

Recently, Hannes Gissurarsson of the University of Iceland and Daniel Mitchell of CATO Institute co-wrote The Iceland Tax System - Key Features and Lessons for Policy Makers. The paper shows how dramatic tax reductions and yet low rates on productive behavior, a 10 percent rate on capital income, 18 percent rate on corporate income and the repeal of the wealth tax boosted growth, efficiency and job creation in the Icelandic economy, reversing the low output performance, stagnation and high unemployment into the course of high output growth rates and international competitiveness of a small and open economy aided by prosperity and an enviable standard of living.