Evaluation of the Swedish EITC phase-out
In this project we evaluate the earnings effects of the phase-out of the Swedish Earned Income Tax Credit (EITC). The EITC (jobbskatteavdraget) was first introduced in 2007, and it has been expanded several times since then. Nowadays (2021) the maximum tax credit amounts to SEK 2,600 per month. On January 1, 2016, a phase-out of the EITC, which affected high income earners, was introduced. For each additional krona earned, the tax credit is reduced by 3%. This reform increased the marginal tax rates of high income earners, who were already facing high marginal tax rates. In a simple and transparent way, we study how earnings have developed in “treated” and “non-treated” income groups.