The survey found that tax incentives have an impact on the migration of specific groups, such as patent-holding top innovators and other high-income individuals.
Many studies show that high-income immigrants and top innovators react strongly to changes in income taxation and R&D tax credits, according to Youssef Zad, chief economist of the Finnish startup community. These people have the skills that are essential to the ability of businesses in the region to innovate and increase productivity. Finland needs to have more skilled labor because of the strong increase in R&D expenditure under the R&D funding act. The competition for innovators is intense, and they are not queuing up to come to Finland.
High taxation also has its advantages: it funds critical public services that can enhance Finland's attractiveness. We must hold onto critical welfare services. Finland's economy is rapidly increasing its debt, so any potential tax cuts must be channeled carefully to avoid further weakening of public finances. Income taxation does not affect the migration of skilled labor, according to the literature. I do not think it is reasonable to reduce income taxation at all income levels in Finland, at least in fear of labor leaving elsewhere. In the survey, we discussed limited incentives for high-skill and income-level labor that moves to Finland. As a policy change, we should consider increasing the incentives for key personnel taxation as a policy change, according to Zad.
High taxation has its advantages, as it funds critical public services that can enhance the country's attractiveness. The financing base of the public sector and the reduction of the need for borrowing can be achieved by supporting strong economic growth. In Finland, we need to create a tax-competitive environment. This way, we can attract the skilled labor force that Finland desperately needs to compete globally.