A report from the Organisation for Economic Cooperation and Development (OECD) highlights the role of tax systems in providing the right financial incentives to make certain that governments, individuals, and firms all share the costs and the benefits of investments in skills.
Read the OECD release
The OECD report—Taxation and Skills—finds that, at current wage and tax levels, students earn significant net returns on investing in their skills. Equally, on average across the OECD, the costs of government investment in skills are recouped through higher future income tax revenue—even without accounting for other benefits such as faster growth, lower unemployment and improved well-being.
The report also finds that tax systems reduces tertiary students’ incentives to enter higher education by 20% on average across the OECD and by nearly 40% in some countries. This is largely as a result of the impact of higher labour taxes on the higher wages earned by those with better skills.
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