This article proposes an analysis, which we consider extremely useful in the current economic context, of the evolution of labour income fiscality, more precisely, the effect of the public debt growth on the tax wedge for the labour income.

The share of fiscal revenues from direct taxes, indirect taxes and social contributions is relatively close in the old member states of the European Union in comparison with the new member states, which register a lower level of income from direct taxes. The low level of income from direct taxes is compensated by more significant shares of the social contributions or indirect taxes.

The main motivations of cross-border migration are: a successful career in a multinational corporation, high variations of the tax rate, of the salary income between states and, last but not least, the level of the net salary. To this day, there are no plans to harmonize across the European Union the legislation regarding the taxes wages and the social security contributions. Still, the European Union had in view the coordination of the national tax systems to make sure that the employees and the employers do not pay several times the social contributions in their movement across the community space.

Despite the fact that some states tax the labour income at a low level, the labour fiscality remains high in the European Union in comparison with other industrialized economies, probably also due to the fact that the majority of the member states have social market economies. The increase of the fiscality level for the labour income determines the decrease of the employment rate and the raise of the unemployement rate.

The solution to guarantee a higher employment rate, which is a target of the European Union Strategy „Europe 2020” could be the relaxation of the labour income fiscality by transferring the tax wedge on the labour income towards property or energy taxation.