By Stijn Broecke.
“The hardest thing in the world to understand is the income tax.” –Albert Einstein.
Tax incentives are used widely across OECD countries to incentivise individuals to invest in post-compulsory education and training – however little is known about their effectiveness. Recent evidence from the United States highlights the risk of creating overly complex systems in which the embedded incentives are no longer fully understood by individuals. This carries an important lesson for other countries in designing their own tax measures for skills investments.
Tax incentives are widely used to nudge people into acquiring skills
While there are many reasons why individuals invest in education and training, an important motivation is the expected return in terms of higher future earnings in the labour market. In fact, the high returns attached to most forms of education and training have been used by many governments across the OECD…
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