Australia would benefit from cutting personal income tax and addressing high levels of income and wealth inequality, a new Organisation for Economic Cooperation and Development (OECD) report shows.

The Paris-based think tank examined rich countries' approaches to tax reform and found that while nations had moved to cut corporate taxes not enough was being done to reduce the divide between the rich and poor.

Inequality of market incomes (before taxes and transfers) has continued to increase slightly since the global financial crisis on average in OECD countries, it said, with 20 out of 33 countries examined reporting an increase.

This has worsened the drag on economy-wide household spending, it said.