Table of Contents

  • This annual publication provides details of taxes paid on wages in all thirty-four Member countries of the OECD.Previous editions were published under the title The Tax/Benefit Position of Employees (1996-98 editions) and The Tax/Benefit Position of Production Workers (editions published before 1996). The information contained in the Report covers the personal income tax and social security contributions paid by employees, the social security contributions and payroll taxes paid by their employers and cash benefits received by families. The objective of the Report is to illustrate how personal income taxes, social security contributions and payroll taxes are calculated and to examine how these levies and cash family benefits impact on net household incomes. The results also allow quantitative cross-country comparisons of labour cost levels and of the overall tax and benefit position of single persons and families.

  • This Report provides unique information for each of the OECD countries on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for one- and two-earner households, and the implied total labour costs for employers. These data are widely used in academic research and in the formulation and evaluation of social and economic policies. The taxpayer specific detail in this Report enables it to complement the information provided annually in the Revenue Statistics, a publication providing internationally comparative data on tax levels and tax structures in the thirty-four Member countries. The methodology followed in this Report is set out briefly in the introduction section below and described in more detail in .

  • Taxes on labour income – including personal income taxes and social security contributions – account for roughly one half of total tax revenue, on average, across OECD countries. High reliance on labour income taxation often results in high tax burdens on workers. Tax burdens can be measured with several alternative indicators, including marginal and average personal tax rates. Marginal personal tax rates, which indicate the tax payable on an additional currency unit of earnings, affect incentives to increase work effort, to follow training or to look for a better-paid job. Average personal tax rates, which indicate the share of gross earnings spent on taxes, may affect incentives to participate in the labour market. Average personal tax rates that increase with income imply that the amount of tax paid is related to an individual’s capacity to pay, and that the tax and benefit system is progressive. Average and marginal personal tax rates on wage income are determined by the interaction of provisions that define the tax base, statutory tax rates, and tax credits that are deducted after the application of tax rates to the tax base. The Taxing Wages series presents these and other key tax burden indicators annually for OECD member countries. To shed light on the underlying differences in average and marginal personal tax rates, this Special Feature takes a close look at statutory personal income tax (PIT) rates, the income thresholds where PIT and employee social security contribution (SSC) rates apply, and other statutory provisions that shape the average and marginal personal tax burden on labour income.