Taxation of Income from Labour and Capital in Finland - Towards Greater or Lesser Equality?

Abstract

The structure and reforms of the direct tax system over the last two decades is summarized, emphasizing the tax base broadening implemented with dual income taxation and contrasting it to the tax system of the 1980’s. Different categories of capital income are still taxed at rates that are far from uniform. On average labour income is less heavily taxed in Finland than income from capital. There is scope for flattening the progressive tax rate schedule on earned income to prevent high opportunity wage professionals to transform labour income into double-taxed realized capital gains.