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Taxation and Employment

image of Taxation and Employment

This publication examines the effects of taxation on employment, highlights the resulting policy challenges, and discusses the ways governments endeavour to address these challenges.  Chapter 1 provides a broad overview of the effects of taxation on employment, examining how taxes on labour income can affect both the size of the labour force and the level of unemployment, and highlighting key areas of concern for tax policy makers.  This analysis is then augmented in chapters 2-4 by the more detailed analysis of the effects of taxation on the employment of three groups where empirical research suggests that responses of labour supply to taxation may be relatively large: low-income workers, mobile highly-skilled workers, and older workers.  As well as highlighting key areas of concern for tax policy makers, the report places a particular focus on the different measures that have been adopted by countries to attempt to overcome these problems, discussing, where possible, the main design features, and the advantages and disadvantages of the different approaches that have been adopted.

English

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The Taxation of Mobile High-Skilled Workers

This chapter looks at the international dimension to the taxation of employment income, particularly in relation to high-skilled individuals. Globalisation and the growth of MNEs have, empirical evidence suggests, increased the extent to which corporate income tax rates and regimes affect the location of investment (see, for example, Altshuler et al., 2001; OECD, 2007c). But have such trends had an impact on labour markets and is a global market for “talent” developing? The attractions of the US market for skilled (English-speaking) workers has, for instance, been suggested as a possible explanation for trends in top incomes in English-speaking countries showing similar trends to the United States (albeit to a less marked degree).

English

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