<abstract xmlns="http://www.w3.org/1999/xhtml"><p>We provide an analysis of the revenue-maximizing top earned income tax rate for a country with one of the highest levels of earnings taxation in the world, Finland, and compare it to the current level of taxation. We account for the effect of income-shifting possibilities in the calculations and find that the current top tax rate on earnings in Finland is likely to be below the revenue-maximizing rate. We provide an explicit account of assumptions behind the Laffer curve calculations and demonstrate that policy conclusions depend critically on non-trivial choices regarding, for example, how the current top tax rate is calculated. The assumptions in the Laffer curve calculations need to be made explicit if the calculations are to provide guidance for policy.</p></abstract>

We provide an analysis of the revenue-maximizing top earned income tax rate for a country with one of the highest levels of earnings taxation in the world, Finland, and compare it to the current level of taxation. We account for the effect of income-shifting possibilities in the calculations and find that the current top tax rate on earnings in Finland is likely to be below the revenue-maximizing rate. We provide an explicit account of assumptions behind the Laffer curve calculations and demonstrate that policy conclusions depend critically on non-trivial choices regarding, for example, how the current top tax rate is calculated. The assumptions in the Laffer curve calculations need to be made explicit if the calculations are to provide guidance for policy.

Revenue-maximizing top earned income tax rate in the presence of income-shifting

Nordic Tax Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Revenue-maximizing top earned income tax rate in the presence of income-shifting"}

We provide an analysis of the revenue-maximizing top earned income tax rate for a country with one of the highest levels of earnings taxation in the world,...

Revenue-maximizing top earned income tax rate in the presence of income-shifting

Article Category: Article

Publié en ligne: 06 nov. 2017

Pages: 100 - 107

Reçu: 02 juin 2017

Accepté: 10 août 2017

DOI: https://doi.org/10.1515/ntaxj-2017-0007

Mots clés
the Laffer curve, income-shifting, tax policy

© 2017 K. Kotakorpi and T. Matikka

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Revenue-maximizing top earned income tax rate in the presence of income-shifting

Article Category: Article

Publié en ligne: 06 nov. 2017

Pages: 100 - 107

Reçu: 02 juin 2017

Accepté: 10 août 2017

DOI: https://doi.org/10.1515/ntaxj-2017-0007

Mots clésthe Laffer curve, income-shifting, tax policy

© 2017 K. Kotakorpi and T. Matikka

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Mots clés
the Laffer curve, income-shifting, tax policy