Taxation and Skills
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Taxation and Skills

This Tax Policy Study on Taxation and Skills examines how tax policy can encourage skills development in OECD countries. This study also assesses the returns to tertiary and adult education and examines how these returns are shared between governments and students. The study builds indicators that examine incentives for individuals and governments to invest in education. These indicators take into account the various financial costs of skills investments for individuals such as foregone after-tax earnings and tuition fees, as well as whether investments are financed with savings or with student loans. Costs borne by governments such as grants, scholarships, lost taxes, and skills tax expenditures are also accounted for. The indicators also incorporate the returns to skills investments for individuals and governments through higher after-tax wages and higher tax revenues respectively.

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OECD

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This discussion outlines specific skills tax expenditures (STEs) that have been added to the personal income tax (PIT) and Social Security Contribution (SSC) systems of each country’s Taxing Wages model for 2011. Details of these models can be found in OECD Taxing Wages (OECD, 2014). These STEs largely offset the costs of skills investments through the PIT system. A more detailed discussion of the STEs affecting skills investments are contained in Torres (2012).

 
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