According to the report, tax incentives affect the migration of certain groups, such as top innovators in the patent industry and other high-income individuals.
Youssef ZadThe chief economist of the Finnish startup community stated that several studies have shown that high-income immigrants and top innovators react strongly to changes in income taxation and R&D tax credits. These are people whose skills are essential for the innovative capacity of companies in the region and increasing productivity. Finland also desperately needs these people, especially now, when the strong increase in R&D expenditures in accordance with the R&D Financing Act requires an improvement in the availability of skilled labor. Global competition for inventors is fierce, and they are not queuing up to come to Finland.
High taxation also has its advantages: it finances critical public services that can increase Finland’s attractiveness. We must hold on to such critical welfare services. “Finland’s economy is increasing its debt rapidly, and therefore possible tax reductions must be channeled carefully so that the public finances do not deteriorate further. The literature also shows that income taxation does not, at least in the big picture, affect the migration of the skilled workforce. In other words, I do not think it makes sense to cut income taxation at all income levels in Finland, at least for the workforce in fear of leaving elsewhere.. The survey considers limited incentives for a highly educated and income-level workforce in Finland. As a concrete policy change, we should consider increasing incentives for key personnel taxation,” Zad added.
The most important results of the survey:
- The importance of top innovators and skilled professionals to the national economy is significant.
- High-income immigrants and top innovators react relatively strongly to tax incentives.
- High taxation also has its advantages: it finances important public services that can increase the country’s attractiveness. However, the financing base of the public sector and reducing the need for borrowing can be achieved by supporting strong economic growth. That is why we have to create a tax competition environment in Finland. In this way, we can attract a skilled workforce, which Finland desperately needs to compete globally.
Source: The Nordic Page