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Taxation and Skills

image of 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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Introduction: Tax, skills, and inclusive growth

This chapter places this study in the context of OECD work on productivity and inclusive growth, as well as the broader literature on the public finance of education. The importance of skills for growth and productivity, as well as for equality and inclusive growth are all discussed. The impact of the tax system on skills is briefly summarised, and an outline of the study is also provided.

English

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