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Taxing Wages in Latin America and the Caribbean 2016

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This new high profile report provides details of taxes paid on wages in twenty economies in Latin America and the Caribbean.  It covers: personal income taxes and social security contributions paid by employees; social security contributions and payroll taxes paid by employers; cash benefits received by in-work families.

It illustrates how these taxes and benefits are calculated in each member country and examines 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 the amounts of taxes and social security contributions levied and cash benefits received for eight different family types which vary by a combination of household composition and household type.  It also presents the resulting average and marginal tax rates (i.e. the tax burden). Average tax rates show that part of gross wage earnings or total labour costs which is taken in tax and social security contributions (both before and after cash benefits). Marginal tax rates show the part of a small increase of gross earnings or total labour costs that is paid in these levies.

The data presented can be used in academic research and to analyse tax, social and economic policies in Latin America and the Caribbean.

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2013 tax burdens

The 2013 tax burden estimates are presented in Tables 3.1 to 3.10 and Figures 3.1 to 3.8. There are eight model family types varying by marital status, number of children and level of earnings: single taxpayers without children earning 67%, 100% and 167% of the average wage (AW); a single parent with two children earning 67% of the AW; a one earner couple at the AW level with two children; two-earner couples with two children at 133% and 167% of the AW and a two-earner couple without children at 133% of the AW. The results are also presented for a single worker without children and a married couple with two children for each decile of the income distribution. There is a third set of results for these two family types earning an annual gross wage equivalent to USD 10 000, USD 48 000 and USD 60 000.The chapter presents different measures for the average tax burdens (tax wedge, net personal tax rate, personal income tax rate and employee social security contribution rate) and marginal rates (tax wedge and net personal tax rate). The results for two measures of tax progressivity are also considered: tax elasticity on gross earnings and labour costs.

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