Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46368
Authors: 
Pirttilä, Jukka
Selin, Håkan
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Public Finance 3355
Abstract: 
This paper reviews the literature on optimal taxation of labour income and the empirical work on labour supply and the elasticity of taxable income in Sweden. It also presents an overview of Swedish taxation of labour income, offers calculations on the development in effective marginal tax rates and participation tax rates, and estimates, using the difference-in-differences method, the impact of tax incentives on employment rates of elderly workers. After this background, we ponder possibilities for reforming the Swedish tax system to improve its labour market impacts. We suggest better targeting the earned income tax credit at families and low-income workers, lowering the top marginal tax rates, and maintaining the tax incentives for older workers.
Subjects: 
optimal taxation
labour income taxation
labour supply
taxable income
Swedish tax system
JEL: 
H21
H24
J22
Document Type: 
Working Paper

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