Finnish Centre of Excellence in Tax Systems Research

FIT analyzes the effects of the tax-benefit system and regulation on individuals, firms, and the society, and provides new credible evidence on the determinants of optimal policy. Achieving the aims of taxation and other related policies requires careful attention to details of tax system design. In the spirit of Esther Duflo’s (2017) “economist as plumber” metaphor, the economist-plumbers of FIT consider the design of the tap and the detailed layout of the pipes that make up a tax system. We provide research results that help to locate and fix leakages in the system: Leakages stem from individuals changing their behavior due to taxes and administrative rules, which may reduce economic activity, tax revenue, and welfare. Such costs need to be carefully measured and weighed against the benefits of taxation.


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