This annual publication provides details of taxes paid on wages in all 35 member countries of the OECD.Previous editions were published under the title The Tax/Benefit Position of Employees (1996-1998 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.

The average worker in OECD countries pays just over one-quarter of their gross wages in income taxes and social security contributions (SSCs), a ratio that has remained relatively stable over the last two decades. On average, the net personal average tax rate (NPATR), defined as the sum of personal income tax (PIT) and employee SSCs, minus cash benefits as a percentage of gross wage earnings, was 25.5% for the average single worker in OECD countries in 2017. Belgium had the highest rate, at 40.5%, with Denmark and Germany being the only other countries with rates of more than 35%. Chile and Mexico had the lowest NPATRs at 7% and 11.2% respectively. Korea was the only other country with a rate of less than 15%.

This chapter presents the main results of the analysis of the taxation of labour income across OECD member countries in 2017. Most emphasis is given to the tax wedge – a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee – which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. The calculations also focus on the net personal average tax rate. This is the term used when the personal income tax and employee social security contributions net of cash benefits are expressed as a percentage of gross wage earnings. The analysis focuses on the single worker, with no children, at average earnings and makes a comparison with the single earner married couple with two children, at the same income level. A complementary analysis focuses on the two earner couple with two children, where one spouse earns the average wage and the other 67% of it.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.