This study analyzes income tax burden of employees and compares structure of effective tax rates of 4 countries(Korea, the United States, the United Kingdom, Japan). This gives us useful implications on Korean income tax system. For the tax reform, we also analyze economic impacts of two major income allowances, employment income deduction, tax credits for wage and salary income earners. The analysis suggests that Korean income tax system is needed to improve equity that is continuously deteriorate due to increase of minimum taxable income level. And the economic analysis reveals that tax credits for wage and salary workers is superior to general employment income deduction. The results imply that Minimum taxable income of single household is required to set well below of current 50% level of average production worker's income and actual cost of living should be considered in the decision of minimum taxable income of bigger household(4 persons). For the actual reform, we propose no further expansion of employment income deduction for efficiency and equity. Two scenarios that reflect the policy suggestions are analyzed. The results show that there are trade-offs between broadening of tax base and tax burden of low-income earners, supporting low-income earners and tax burden of actual income tax payers.