Taxing Wages 2017 provides details of taxes paid on wages in OECD countries. The report can be found here.
Below are the key findings of report:
The average tax wedge in the OECD decreased in 2016 relative to 2015
- Across OECD countries, the average personal income tax (PIT) and social security contributions (SSCs) on employment incomes was 36.0% in 2016, a decrease of 0.07 percentage points relative to 2015.
- In 2016, the highest average tax wedges for childless single workers earning the average national wage were in Belgium (54.0%), Germany (49.4%), Hungary (48.2%) and France (48.1%). The lowest were in Chile (7%), New Zealand (17.9%) and Mexico (20.1%).
- Between 2015 and 2016, the tax wedge increased in 20 of 35 countries, fell in 14 and remained unchanged in Chile. Changes to the PIT were the main contributor to an increasing total tax wedge in 16 of the 20 countries.
- There was an increase of more than one percentage point in the tax wedge in only one country; Greece (1.06 percentage points), which was driven by an increase in both PIT and SSCs.
- A decline of one percentage point or more was experienced in two countries, which both implemented labour income tax reforms – Austria (2.47 percentage points) and Belgium (1.32 percentage points). The change in Austria was mainly due to lower PIT, whereas in Belgium it was caused by lower PIT and employer SSCs.
- Changes to PIT were also the primary contributing factor in most countries where the tax wedge fell in 2016. In Iceland and Switzerland, changes in SSCs also contributed. Decreasing employer’s SSCs were the main factor in France and Italy.
Tax wedges for families with children
- In 2016, the highest tax wedge for one-earner families with two children at the average wage was in France (40.0%). Belgium, Finland, Greece, Italy and Sweden had tax wedges of between 38% and 40%. New Zealand had the lowest tax wedge for these families (6.2%), followed by Chile (7%), Ireland (8.3%) and Switzerland (9.1%). The average for OECD countries was 26.6%.
- Between 2015 and 2016, the largest increase in the tax wedge for one earner families with children was in New Zealand (1.24 percentage points). The largest decreases were in Austria (2.68 percentage points), Portugal (2.50 percentage points), Belgium (1.73 percentage points), Hungary (1.60 percentage points) and Ireland (1.03 percentage points).
- The tax wedge for families with children is lower than that for single individuals without children in all OECD countries except in Chile and Mexico, where both family types face the same tax levels. No PIT is payable at the average wage level in Chile and no tax provisions for families with children exist in Mexico. The differences are particularly large in Canada, the Czech Republic, Germany, Ireland, Luxembourg and Slovenia.
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