Taxing Wages 2022
Impact of COVID-19 on the Tax Wedge in OECD Countries
This annual publication provides details of 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 received by workers. It illustrates how these taxes and benefits are calculated in each member country and examines how they impact 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 average and marginal effective tax rates on labour costs for eight different household types, which vary by income level and household composition (single persons, single parents, one or two earner couples with or without children). The average tax rates measure the part of gross wage earnings or labour costs taken in tax and social security contributions, both before and after cash benefits, and the marginal tax rates the part of a small increase of gross earnings or labour costs that is paid in these levies.
Taxing Wages 2022 includes a special feature entitled: "Impact of COVID-19 on the Tax Wedge in OECD countries".
Also available in: French
Executive Summary
The tax wedge, the primary indicator presented in this Report, measures the difference between the labour costs to the employer and the corresponding net take-home pay of the employee. It is calculated as the sum of the total personal income tax and social security contributions (SSCs) paid by employees and employers, minus cash benefits received, as a proportion of the total labour costs for employers. While the Taxing Wages models calculate the tax wedge (as well as average and marginal tax rates) for eight household types, the analysis in this Report focuses on four of those household types: the single worker earning the average wage, two-earner couples with two children earning 100% and 67% of the average wage, couples with one earner at the average wage and two children, and a single parent earning 67% of the average wage.
Also available in: French
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