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Taxing Wages 2014

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Taxing Wages provides unique information on the taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees; social security contributions and payroll taxes paid by employers and cash benefits paid by in-work families. The purpose is to illustrate how these taxes and benefits are calculated in each member country and to examine how they impact on household incomes. The results also enable quantitative cross-country comparisons of labour cost levels and the overall tax and benefit position of single persons and families on different levels of earnings.

The publication shows this information for eight household types which vary by income level and household composition and the results reported include the marginal and average tax burdens for one and two earner families and the total labour costs of employers. These data are widely used in academic research and in the preparation and evaluation of social and economic policy making.

Taxing Wages 2014 includes a special feature entitled: ‘Changes in Structural Labour Income Tax Progressivity over the 2000-2012 Period in OECD Member  Countries.'

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Graphical exposition of the 2013 estimated tax burden

The graphs in this section show the estimated tax burden on labour income in 2013 for gross wage earnings between 50 per cent and 250 per cent of the average wage (AW). For each OECD member country, there are separate graphs for four family types: single taxpayers without children, single parents with two children, one-earner married couples without children and one-earner married couples with two children. The net personal average and marginal tax rates ((the change in) personal income taxes and employee social security contributions net of cash benefits as a percentage of (the change in) gross wage earnings) are included in the graphs that show respectively the average and the marginal tax wedge.The marginal tax wedges in the graphs are calculated in a slightly different manner than the marginal tax rates that are included in the rest of the Taxing Wages publication. In Taxing Wages, marginal rates are usually calculated by increasing gross earnings by one currency unit (except for the spouse in the one-earner married couple whose earnings increase by 1/3 of the average wage). However, the +1 currency unit approach requires the calculation of marginal rates for every single currency unit within the income range included in the graphs. It otherwise would not be correct to draw a line through the different data points because the data for the income levels in between the different points would be missing. In order to reduce the required number of calculations, the marginal rates that are shown in the graphs are calculated by increasing gross earnings by 1 percentage point – each line in the graph therefore consists of 200 data points – instead of 1 currency unit.

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