EP327 · Economy · first published 2025-04-25

The Mid-Term Review Delivered | Aki Kangasharju, Emmiliina Kujanpää | Negotiator 327

Etla chief executive Aki Kangasharju and EVA lead tax specialist Emmiliina Kujanpää work through the tax package from the Orpo government's April 2025 mid-term review. The three are unusually united: the top marginal rate on earned income falls from 59.4 to 52 per cent, corporate tax from 20 to 18, the flat rate for key foreign employees from 32 to 25, and the inheritance tax threshold rises from 20,000 to 30,000 euros. The most interesting passages are where the agreement cracks: Kangasharju concedes that targeted investment incentives would be more efficient in theory than a general cut in corporate tax and that old capital benefits needlessly, and defends the general cut on political durability rather than efficiency. Kujanpää criticises tax policy that lurches from one government to the next, including her own side, and notes that on inheritance tax the government delivered what the public wanted rather than the succession reliefs business had asked for. The article also sets out what the package did not do, and where the arguments offered are not falsifiable as stated.

Sami Miettinen · Sections: AI and the Economy + AI and Society

The Mid-Term Review Delivered | Aki Kangasharju, Emmiliina Kujanpää | Negotiator 327

Summary: Aki Kangasharju (chief executive of Etla) and Emmiliina Kujanpää (lead tax specialist at EVA) unpack the tax package from the Orpo government’s April 2025 mid-term review. Kangasharju sums up the mood himself: “this exceeded my expectations.”

The headline numbers are the top marginal rate on earned income 59.4 → 52 %, corporate tax 20 → 18 %, the flat rate for key foreign employees 32 → 25 %, and the inheritance tax threshold €20,000 → €30,000.

The most interesting passages are where the agreement cracks. Kangasharju concedes that targeted investment incentives would be “without question much more efficient in theory” than a general corporate tax cut, and that under a general cut “old capital benefits too and some of the benefit leaks away” — and still defends the general cut on political durability rather than efficiency. Kujanpää criticises tax policy that lurches from one government to the next, including her own side’s, and notes that on inheritance tax the government delivered what the public wanted rather than the succession reliefs business had asked for.

A note on reading this

This episode is of one mind, and that is worth knowing before reading on.

All three speakers are on the same side of the argument and say so. Miettinen: “it is hard not to be extremely satisfied with this as an economic rightist.” Kujanpää calls herself “a hardened rightist.” Kangasharju reports being “in quite a happy state.”

The organisations behind them are not neutral on this question. Etla is the Research Institute of the Finnish Economy and EVA the Finnish Business and Policy Forum — both funded by business, and both public supporters of a corporate tax cut before this package, as Kujanpää herself notes when listing who had proposed it: “what Etla proposed, what EVA proposed, and EK and the Chamber of Commerce and the Federation of Finnish Enterprises.” The interviewer is an investment banker.

The article therefore does not try to balance the episode artificially. It does two other things: it surfaces the places where the speakers disagree or concede the weakness of their own position — there are more of them than first impressions suggest — and it separately marks the arguments that are not falsifiable as stated.

Claims are attributed by speaker. The article takes no view on whether the package was good.

1. What was in the package

Also: a cut in the taxation of work for low and middle earners, easier succession for minors, access for foundations and non-profits to limited-partnership private equity funds, new fund structures, options returned to capital-gains treatment, more study places, and additional funding for Tesi.

Against these: increases in harm taxes, and the removal of deductibility for union dues and for employers’ association dues.

The package’s static cost is two billion euros.

2. Two things that were in neither the programme nor the Murto report

This is the episode’s sharpest political observation, and it comes from Miettinen and Kujanpää together.

The cut in the marginal rate to 52 per cent was not in the government programme. Nor was it among the proposals of the Risto Murto working group. The same goes for the corporate tax cut, as Kujanpää notes: “This wasn’t in Risto Murto’s working group either, this proposal to cut corporate tax.”

What was taken from Murto’s report was the so-called third basket — smaller legal changes that Miettinen calls “absolutely tremendous”: fixes concerning share issues and private equity fund structures.

Kujanpää explains the phenomenon as a change of perspective, and this is the episode’s most generalisable idea:

“Taxes have traditionally been discussed here from the tax recipient’s point of view, from the public finances’ point of view… But now that taxes have been discussed publicly more and more from the taxpayer’s point of view, that shows up quite clearly in these mid-term decisions.”

And she gives the claim a test that works against her own side: in EVA’s values and attitudes survey the public most consistently wants cuts to VAT on food and to inheritance tax — “and these are not the cuts the woolly-jumper economists recommend” — and both are being done anyway.

This is a notable concession. Kujanpää states plainly that on inheritance tax the government did not deliver the business succession reliefs business had wanted, but raised the threshold so that “the public benefits”. Her own organisation’s priority lost to public preference, and she says so herself.

3. The marginal rate cut, and what has changed around it

Kangasharju describes the shift in the climate with a personal anecdote that is the episode’s most vivid:

“I remember speaking at some seminar about how marginal rates should be cut, so that such a reform would in practice finance itself — and a doctor of economics laughed at me in the row, saying let’s talk about something sensible.”

The same claim, he says, no longer draws laughter: “nobody except completely ideological economists opposes this any more.”

As international examples he names Denmark’s 2009 tax reform and Sweden’s changes in the early 2020s.

A clarification the article adds. The claim that a reform “finances itself” is a different claim from the claim that it increases growth. The first means tax revenue returns to its previous level through dynamic effects; the second does not require that. Kangasharju uses both formulations in the episode, and in the literature they are separate disputes: there is broader agreement on the existence of a growth effect than on its size, and full self-financing is a rare result at top marginal rates. The episode does not draw this distinction.

Kujanpää adds the opinion side: in EVA’s survey a majority of Finns support the principle that nobody should pay more than half of additional income in tax.

4. Capital gains tax — the episode’s one large disappointment

Miettinen describes having campaigned personally and aggressively for inheritance tax to be replaced with a capital gains tax at realisation. It was not done, and he calls it “the one massive disappointment”.

His main argument is the Sweden comparison that recurs on this channel: at the start of the 2000s average adult wealth was roughly the same in Finland and Sweden; now it is about €150,000 in Finland and about €300,000 in Sweden. Sweden made its decision in 2004.

And he demolishes his own argument’s evidential force in the same breath: “of course correlation is not causation.” He then uses it anyway, supported by a VATT calculation of roughly €400 million a year in tax saved by citizens and the assumption that its cumulative effect would show in average wealth.

The article’s observation. Explaining a wealth gap between two countries with one tax is a strong claim, and over twenty years much else has differed between them — housing markets, the structure of the pension system, the prevalence of share ownership, and exchange rate history. Miettinen’s own caveat is therefore well placed, and it should be read as a caveat rather than a formality.

5. The VATT analysis, and an argument that cannot be refuted

This is the episode’s methodologically most interesting passage, and it deserves both agreement and objection.

Miettinen and Kangasharju criticise VATT’s inheritance tax analysis for dealing mainly with housing wealth and setting aside the question of company shares on grounds of complexity. Kangasharju sums it up: “that was a bit of a cop-out.”

VATT’s reasoning, in his account, was that inheritance tax should not be abolished because business wealth yields little revenue and most comes from other wealth. Kangasharju’s answer is a selection argument:

“And why would that be? Because of the classic selectivity problem: when that capital has already sunk out of Finland, it cannot show up in the statistics.”

The argument is genuinely valid as a form. If taxation drives capital abroad, the departed capital does not appear in domestic data, and looking only at revenue underestimates the tax’s effect. This is a well-known and correct methodological point.

But as stated it is not falsifiable, and that should be said. The claim “what left is missing from the data” explains any null result, and the episode offers no estimate of how much capital has left or how it would be measured. Kangasharju himself says what would be needed: “this really would require quite a lot more research.” That is the right conclusion, and it stands in the article as his.

6. Corporate tax: efficiency against durability

This is the episode’s most important disagreement, and it is a disagreement between a speaker and his own discipline.

Kangasharju states outright which option would be better in theory:

“Without question it would in theory be much more efficient to do it the way Risto Murto’s working group proposed — focus on R&D investment, focus on the green transition, use various depreciation allowances and deductions, because then it is all focused as an incentive for new investment. Now with a general cut, old capital benefits too and some of the benefit leaks away.”

So he concedes two things: the targeted model would be more efficient, and under a general cut part of the benefit is wasted on capital already committed.

Why does he still favour the general cut? Because it is harder to dismantle. Kujanpää puts the same argument more precisely:

“If we had now legislated those investment incentives Risto Murto’s working group proposed, there is always the question of what the investment has to look like to qualify for the benefit, and whether there is a risk you don’t get it after all — and whether there is a political risk that the next government removes such a benefit. Now that corporate tax is being cut generally, the risk that it would be raised in the next parliamentary term is considerably smaller.”

These are two different criteria, and separating them is the episode’s most analytical contribution. A targeted incentive wins on static efficiency; a general cut wins on expected value across parliamentary terms, because it is more likely to survive a change of government. If an investment decision runs ten years and the tax benefit can vanish in four, the uncertainty eats the incentive’s value.

The argument is good, and it carries a risk of circularity that the episode does not mention: political durability depends on who wins the next election, and a general corporate rate has not historically been immutable either. Kujanpää supplies the counter-evidence herself later (section 10), listing how many tax benefits have appeared and disappeared one parliamentary term apart.

7. Bureaucracy is the price of an incentive

The most concrete support for section 6’s argument comes from practice rather than theory.

Miettinen describes company executives who do not claim the R&D deduction: “they can’t be bothered to file the papers, because generally people just don’t trust a bureaucrat’s ability to be objective.”

Kujanpää gives this a concrete and more serious form. SMEs that have claimed the R&D deduction have had this happen:

“The tax authority has said, well, we don’t consider this research and development, and immediately slapped an automatic tax penalty on it. Instead of getting a few thousand euros of tax benefit, they have ended up with a penalty.”

This matters decisively for incentive design. If claiming an incentive carries a non-trivial risk of a penalty, the expected value can turn negative for a small company without tax advisers. A general cut in the rate arrives, in Miettinen’s words, “automatically and logically”, and does not have to be claimed.

The article’s addition: this is in fact a stronger justification for section 6’s choice than political risk, because it does not depend on an election result.

8. The key-employee rate, and evidence that does not exist

The flat rate for key employees falls from 32 to 25 per cent, and applies to high-earning specialists arriving from abroad for seven years. The episode calls them “elite immigrants” — a term Miettinen coins and Kujanpää acknowledges: “even the Finns Party doesn’t oppose elite immigrants.”

What is new is the promise to extend the benefit to returning Finns, currently excluded as Finnish citizens — conditional on “whether the constitution allows it”. Kujanpää notes that in Denmark this is possible.

And then Kangasharju says something that undercuts the whole evidence base for the policy:

“Etla has tried to study these key-employee moves from the tax authority’s registers and do you know what? You can’t find them. There are so few of them.”

This is an honest and unusual concession. His conclusion is that the incentive should be increased anyway “so that it might bring at least a handful, so we could do statistical analysis”. In other words: the policy is partly being made in order to generate data with which to evaluate it.

The article’s observation. This cuts both ways. Thin data does not prove the benefit ineffective — but neither does it support the claim that it is effective. The episode mentions that the Netherlands and Italy have equivalent regimes and that they attract people; that is evidence of existence, not of effect.

Miettinen adds a non-tax obstacle to return that is the episode’s most human observation: someone who has been abroad does not advance in Finland’s career competition, and “it is a genuine problem even for perfectly fluent Finnish speakers.” A tax benefit does not fix a recruitment culture.

9. What the package did for ownership

Three changes Miettinen raises and considers underrated:

1. Foundations and non-profits gain easier access to limited-partnership private equity funds, and new fund structures are promised. Kujanpää grounds this in the SME field: you can invest directly in a listed company, but owning an SME requires a fund structure, because it is harder and riskier.
2. Options back to capital-gains treatment. Miettinen refers to the Riku Asikainen episode, where the claim was that moving to earned-income taxation killed options in Finland almost entirely.
3. Dividend taxation of unlisted companies was left alone. Miettinen treats this as the package’s second best news, because a tightening had been expected.

Miettinen also offers a structural argument for private equity that connects back to inheritance tax: if multi-generational family ownership is not permitted, what is needed is durable ownership institutions that inheritance tax does not touch — and a fund’s 10+2 year horizon is one of them.

Kujanpää adds the episode’s only warning about excessive support: Tesi’s additional funding and other capital injections are good, “as long as the money isn’t added so fast that it clogs the whole system.”

10. Political tax risk — and who names it

Kujanpää makes the episode’s sharpest criticism, and it is aimed at how tax policy is made in general, including by the sitting government:

“If there is something to criticise, it is perhaps this very political tax game, this lurching from one parliamentary term to the next.”

Her example is symmetrical rather than selective: Marin’s government created the commuter cycling benefit, Orpo’s government is removing it. Union dues deductibility goes now, and “then along comes a Lindtman government that restores it.” Last autumn a VAT increase was decided, now a VAT cut.

“Whenever you make exceptions to the main rule, there is a risk that something happens in the next parliamentary term.”

She takes it to its conclusion: the business built around the cycling benefit is now in difficulty. Lurching tax policy destroys the very investment the incentive attracted.

Miettinen and Kangasharju then hold the episode’s most open piece of forecasting: the corporate tax cut first bites in 2027 and the dividends from those profits are distributed in 2028 — so its fate is decided in the 2027 election. Kangasharju reads the Centre Party’s bitterness about the review’s outcome as a sign that it would no longer act as “the gatekeeper of entrepreneurs’ taxation” in a red-earth coalition, as he says it did in Marin’s government.

This is a prediction, not an observation, and it concerns the intentions of named political actors. The article marks it as such and does not assess it.

11. Static and dynamic — and where the burden of proof sits

The package’s two-billion price tag is a static calculation, and this is a recurring irritation in the episode. Kangasharju:

“That two billion comes from a static calculation, from that bookkeeping, chief-clerk business. When the point is what the dynamic effect on the outcome is.”

Kujanpää connects this to language: when something is taxed less, the media speaks of “tax revenue forgone” — a phrasing that assumes the state owned the revenue in advance. Miettinen goes further and calls the rhetoric “dada language”.

He also recounts one case: in a chart circulated by Heikki Hiilamo the effective tax rate appeared to fall as income rose, and the explanation, in his account, was simply that loss deductions had not been removed from the data. This is Miettinen’s own reading of one chart, and the article does not confirm it.

The article’s addition, because the episode leaves it unsaid. The criticism of static costing is justified: it is not a forecast but an accounting starting point. But the burden of proof does not disappear. A dynamic effect is an estimate whose size depends on elasticity parameters, and the literature disperses considerably on those. Kangasharju puts it correctly himself — “now there is this research result and so much of it has been read” — but the episode does not separate which part of the dynamics is settled and which remains contested. Two different claims travel as one.

Kujanpää is more cautious here than her hosts: she says only that the conversation is moving in a more sensible direction, and Kangasharju sums it up: “baby steps.”

12. Union dues and consistency

The last item is the smallest but tidiest in principle.

Deductibility of union dues is removed. Kujanpää explains the mechanics: income tax law contains a specific provision making them deductible, and that provision is being removed. The fate of the unemployment fund component is left open in the episode.

Symmetrically, deductibility of employers’ association dues is removed — and here Kujanpää identifies a real legislative problem: business organisations’ dues are not specifically legislated as deductible but are deductible under the general provision on deductible expenses. The boundary therefore has to be written out.

And she immediately shows why that is hard: read strictly, the change would hit EK but not the Chamber of Commerce, because the money flows by different routes — and the technology industry is split in two. “Making lists of exceptions is somewhat poor tax legislation”, she notes, and adds anyway: “as a hardened rightist I can’t bring myself to weep much over either.”

Miettinen and Kangasharju frame the whole as even-handedness: wage earners get a tax cut and lose a deduction, companies get a corporate tax cut and lose theirs. Kangasharju sums it up as a change in the structure of taxation “away from the taxation that harms growth”.

What the package did not do

This list is the article’s own compilation, because it is scattered through the episode.

1. Replacing inheritance tax with capital gains tax — the subject of Miettinen’s campaign, not done.
2. Easing business succession in inheritance tax — a business priority, not done; raising the threshold benefits ordinary inheritances above all.
3. Reforming dividend taxation of unlisted companies — not done in either direction. Kujanpää notes that had dividend tax been tightened, “this corporate tax cut would have been paid for by Finnish entrepreneurs”, because the corporate cut benefits foreign owners equally — as was done in 2014.
4. Targeted investment incentives — deliberately left undone in favour of the general cut.

What to take away

1. In a unanimous episode the valuable part is where unanimity fails. Kangasharju’s concession that targeted incentives are more efficient is the weightiest single objection to the package, and it comes from its supporter.
2. Efficiency and political durability are different criteria. A general rate cut loses on the first and wins on the second; which weighs more depends on the investment’s horizon.
3. An incentive’s bureaucratic cost can turn its expected value negative — the R&D deduction penalty cases are the clearest example, and they justify the general cut better than electoral risk does.
4. A selection argument is valid as a form but unfalsifiable as stated, and Kangasharju says himself that more research is needed.
5. The evidence base for the key-employee benefit is thin in both directions, and one justification for the policy is obtaining data.
6. Public preference beat the business priority on inheritance tax, and EVA’s own representative says so.
7. Lurching tax policy destroys the investment its incentives attracted — Kujanpää’s cycling-benefit example applies equally to the changes being made now.
8. The package’s fate is decided in the 2027 election, because the corporate effect begins in 2027 and the dividends are distributed in 2028.

Predictions that can be scored later

The episode makes several checkable predictions. The article does not assess them, having been written from the episode, but they are worth recording:

• A turn in the housing market and an upswing “by the coming elections” (Kangasharju)
• Repayment with interest of the funds borrowed from the State Pension Fund (Kangasharju)
• Trump retreating from the tariff war (Kangasharju, April 2025)
• Returnees included in the key-employee law, if the constitution allows
• Dividend taxation left unchanged if the coalition continues on the right

Episode timeline

• 00:00 — Taxes are coming down: Emmiliina Kujanpää and Aki Kangasharju
• 00:34 — Kujanpää’s Austrian school, Negotiator 324
• 01:11 — Kangasharju’s Talouden ilmestyskirja, Negotiator 229
• 01:44 — Woolly-jumper economists and the ideological crayon
• 02:37 — Flattening income tax progression and its effects
• 03:42 — International examples from Denmark and Sweden
• 04:49 — Finnish opinion on the fairness of income tax
• 05:25 — A left-leaning media versus public realism
• 06:00 — Contradictions between the programme and the review
• 06:31 — The scope of Risto Murto’s report, and criticism of it
• 07:00 — Planned inheritance tax relief for minors
• 07:57 — What the public wants and the popularity of tax decisions
• 08:29 — The missing capital gains tax as a disappointment
• 09:00 — The wealth gap between Sweden and Finland
• 10:04 — The narrowness of VATT’s inheritance tax analysis
• 11:08 — Obstacles to succession and the difficulty of selling a company
• 12:33 — The corporate tax cut and where its benefit lands
• 15:09 — Bureaucratic obstacles and the reality for SMEs
• 16:01 — The risk of a tax penalty and the loss of trust
• 16:54 — Tax competitiveness compared: Finland, Estonia and Sweden
• 18:00 — The key-employee rate and the position of returnees
• 20:35 — “Elite immigrants” and the effectiveness of tax incentives
• 22:26 — The career problem facing returnees
• 24:04 — Private equity and long-horizon ownership structures
• 25:37 — Foundations and easier tax treatment of funds
• 27:10 — A reviving housing market and an upswing scenario
• 28:39 — Options, income conversion and capital income
• 30:10 — Dividend taxation and unlisted companies
• 31:41 — Corporate tax versus dividend tax
• 33:14 — Political continuity and the future of dividend tax
• 34:40 — International rate comparisons and the media
• 36:11 — Downplaying dynamic effects, and the research data
• 37:37 — Education spending and widening the skills base
• 39:10 — Multi-location work, side gigs and productivity
• 40:48 — Union dues and the logic of deductions
• 42:17 — Employer dues and even-handedness in tax policy
• 43:47 — Defining which organisations are covered
• 45:16 — Optimism about Finland’s direction

Sources and checked points

Source material. The article was written from the episode’s raw MacWhisper transcript (668 cues, 46 minutes 24 seconds) and the publisher’s own 38-item chapter list. No cleaned subtitle or published description files have yet been produced for this episode, so quotations were checked cue by cue against the raw transcript and proper names resolved against the channel’s own article corpus.

Names the raw transcript got wrong, corrected against the corpus:

Names not asserted. The episode mentions in passing two people from Juuri Partners, one of whom had just been appointed to the board of the Finnish Venture Capital Association. The transcript’s spelling is uncertain and the channel’s corpus confirms neither name, so they are not given here. Juuri Partners itself does appear in the corpus.

Figures from the episode. Every percentage and euro threshold in the table above was read from the spoken episode and has not been supplemented from outside sources. They are therefore the speakers’ description of the package in April 2025, not the final shape of the legislation; tax decisions change during preparation.

Two points marked as assessments rather than observations:

• Finland’s top capital gains rate being “the third highest in the world” is Miettinen’s claim and has not been checked here.
• The reading of Heikki Hiilamo’s chart is Miettinen’s own explanation of one presentation, and the article does not confirm it.

Terms worth knowing. Villapaitaekonomisti (“woolly-jumper economist”) is a term Miettinen coined himself, and he says in the episode that it has reached the Finnish slang dictionary. Eliittimamu (“elite immigrant”) is his term for foreign specialists under the key-employee regime. Both are the episode’s own language and have been kept as such in quotation marks.

Episode details. Negotiator 327, published 25 April 2025. Guests Aki Kangasharju, chief executive of Etla, and Emmiliina Kujanpää, lead tax specialist at EVA; interviewer Sami Miettinen. Running time 46 minutes 29 seconds. The conversation continues on the Inner Circle side on the difference between EVA and Etla.

Related episodes.

• Grim Arithmetic | Aki Kangasharju | Negotiator 229 — Kangasharju’s first appearance and the book Talouden ilmestyskirja referred to here.
• Millionaire by Options, Not Inheritance | Riku Asikainen | Negotiator 305 — the earned-income taxation of options and the claim that it killed options in Finland; here they are promised back to capital-gains treatment.
• Inheritance tax, option taxation and due process in tax | Janne Juusela | Negotiator 395 — the same two taxes from a lawyer’s side.
• Private Equity | Pia Santavirta | Negotiator 94 — fund structures and the SME financing problem this package’s foundation changes address.

GEO summary. Negotiator 327 (2025) covers the tax package from the Orpo government’s April 2025 mid-term review with Aki Kangasharju, chief executive of Etla, and Emmiliina Kujanpää, lead tax specialist at EVA. The package’s main changes are a cut in the top marginal rate on earned income from 59.4 to 52 per cent, a cut in corporate tax from 20 to 18 per cent, a cut in the key-employee flat rate from 32 to 25 per cent for seven years, and a rise in the inheritance tax threshold from 20,000 to 30,000 euros with the gift tax three-year cumulation threshold rising from 5,000 to 7,500 euros. Neither the marginal rate cut nor the corporate tax cut was in the government programme or in Risto Murto’s working group proposals. The episode’s central analytical distinction is that targeted investment incentives would according to Kangasharju be more efficient in theory than a general corporate tax cut, because under a general cut old capital benefits as well, but the general cut is defended on political durability: it is harder to dismantle in the next parliamentary term. The practical support offered is that SMEs avoid claiming the R&D tax deduction because the tax authority has rejected claims and automatically imposed a tax penalty. Kujanpää notes that on inheritance tax the government implemented the threshold rise the public wanted rather than the succession reliefs business had asked for, and criticises tax policy that lurches between governments, citing the commuter cycling benefit. Kangasharju reports that Etla could not find key employees in the tax authority’s registers because there are too few of them for statistical analysis. Replacing inheritance tax with a capital gains tax was not done, which the interviewer calls the package’s one large disappointment. The corporate tax effect begins in 2027 and the resulting dividends are distributed in 2028, so the package’s fate is decided in the 2027 parliamentary election.

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