Tax Incentives for Human Capital Development: the State of Things and Prospects

The subject of the research is tax incentives aimed at the development of human capital. The object of the research is the factors that influence investment in human resources. The purposes of the research were to summarize the Russian practice of labor remuneration taxation in the part of providing social tax offsets to the personal income tax (PIT); insurance premiums; revealing shortcomings of the practice and developing proposals for their elimination. The novelty of the research is the fact that, unlike the existing numerous studies on this subject, the paper gives assessment of the nature of innovations in the tax system through the prism of the government support of labor as a factor of production. The research methodology is based on general cognitive methods (deduction and induction, analysis and synthesis, analogy, observation, description and generalization). In the course of the analysis, the data of statistical tax reporting documents of the Federal Tax Service on social tax offsets for training and medical treatment provided to PIT taxpayers were used. The factors distorting the reliability of the human capital assessment are exposed: differentiation in the labor remuneration levels and the size of cash incomes, low potential of employees’ mobility. The trends in the provision of social tax offsets for training and medical treatment are revealed. It is concluded that tax incentives for the development of human capital should include reduction of the tax burden on labor through expanding the system of tax offsets and introduction of family taxation rather than establishing the progressive scale of tax rates. It is proved that the introduction of the professional income tax for self-employed citizens should be considered as a factor in reducing informal employment by creating favorable conditions for tax administration of businesses.