Since 2003 Israel is in a continuous process of reducing tax rates on labor income, which is expected to proceed until 2010. As a result of this process average tax rates in Israel at the income levels in which the vast majority of the labor force is concentrated are lower than in most OECD countries. Even at the higher income level, where Israel's relative tax burden is higher, tax rates are not out of line compared to the OECD countries and are lower than those in the 15 veteran EU members, especially with respect to unmarried taxpayers. These findings reflect to outstanding characteristics of the Israeli tax system: 1) the tax system in Israel is more progressive than in the OECD countries; at low income levels marginal tax rates are markedly lower in Israel while at higher levels - the upper third of the income distribution - they are similar to the average at the European Union countries and higher than in the other developed countries, 2) in Israel there is only a loose link between the family status of the tax payer and tax rates while in most developed countries the tax schedule reflects that status. Israel is also an exception by providing tax relief (personal and child credits) according to the tax payers gender, although the tax relief granted to women in Israel based on the number of their children are not fully utilized in most cases, and often are not even partially usable

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