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Taxing Wages 2011

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Taxing Wages provides unique information on income tax paid by workers and on social security contributions levied upon employees and their employers in OECD countries. In addition, this annual publication specificies family benefits paid as cash transfers. Amounts of taxes and benefits are detailed programme by programme, for eight household types which differ by income level and household composition. Results reported include the marginal and effective tax burden for one- and two-earner families and total labour costs of employers.

These data on tax burdens and cash benefits are widely used in academic research and in the preparation and evaluation of social and economic policy making.

Taxing Wages 2011 includes a special feature entitled "Trends in personal income tax and social security contribution schedules".

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Special Feature: Trends in personal income tax and employee social security contribution schedules

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.

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