TAXING WAGES.

643 Pages·2019·11.859 MB·English

AVAILABLE ON LINE
Taxing Wages 2
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2017-2018
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 in-work families. 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 2019 includes a special feature entitled: “The Taxation of Median Wage Earners”.

ALSO AVAILABLE ON LINE
The data in this publication are also available on line via www.oecd-ilibrary.org under the title OECD Tax
Statistics (https://doi.org/10.1787/tax-data-en).
Taxing Wages
2017-2018
SPECIAL FEATURE: THE
TAXATION OF MEDIAN WAGE
EARNERS
Consult this publication on line at https://doi.org/10.1787/tax_wages-2019-en.
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ISBN 978-92-64-31374-3 9HSTCQE*dbdhed+
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Taxing Wages
2019
2017-2018
This work is published under the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of OECD member countries.
This document, as well as any data and any map included herein, are without prejudice
to the status of or sovereignty over any territory, to the delimitation of international
frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2019), Taxing Wages 2019, OECD Publishing, Paris.
https://doi.org/10.1787/tax_wages-2019-en
ISBN 978-92-64-31374-3 (print)
ISBN 978-92-64-31379-8 (pdf)
Taxing Wages
ISSN 1995-3844 (print)
ISSN 2072-5124 (online)
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.
Corrigenda to OECD publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.
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FOREWORD (cid:327) 3

(cid:41)(cid:82)(cid:85)(cid:72)(cid:90)(cid:82)(cid:85)(cid:71)
This annual publication provides details of taxes paid on wages in all 36 member
countries of the OECD1 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 Report shows the amounts of taxes, social security contributions, payroll taxes and
cash benefits for eight household types, which differ by income level and household
composition. It also presents the resulting average and marginal tax rates. Average tax
rates show that part of gross wage earnings or total labour costs which are taken in
personal income taxes (before and after cash benefits), social security contributions and
payroll taxes. Marginal tax rates show the part of an increase of gross earnings or total
labour costs that is paid in these levies.
The focus of the Report is the presentation of new data on the tax/benefit position of
employees in 2018. In addition, the new data is compared with corresponding data for the
year 2017. The average worker is designated as a full-time employee (including manual
and non-manual) in either industry sectors B-N inclusive with reference to the
International Standard Industrial Classification of All Economic Activities, Revision 4
(ISIC Rev.4) or industry sectors C-K inclusive with reference to the International
Standard Industrial Classification of All Economic Activities, Revision 3 (ISIC Rev.3).
The Report is structured as follows:
(cid:120) Part I (Tax burden comparisons and trends) includes 6 chapters:
(cid:3381) Chapter 1 contains an overview of the main results for 2018.
(cid:3381) Chapter 2 contains the Special Feature on (cid:179)(cid:55)(cid:75)(cid:72)(cid:3)(cid:55)(cid:68)(cid:91)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:68)(cid:81)(cid:3)(cid:58)(cid:68)(cid:74)(cid:72)(cid:3)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:72)(cid:85)(cid:86)(cid:180).
(cid:3381) Chapter 3 reviews the main results for 2018, which are summarised in
comparative tables and figures included at the end of that section.

1 Previous editions were published under the title The Tax/Benefit Position of Employees (1996(cid:177)1998 editions) and The
Tax/Benefit Position of Production Workers (editions published before 1996).
On 25 May 2018, the OECD Council invited Colombia to become a Member. At the time of publication, the deposit of
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list of OECD Members and is not included in the OECD zone aggregates.
TAXING WAGES 2019 © OECD 2019
4 (cid:327)(cid:3)FOREWORD

(cid:3381) Chapter 4 presents a graphical exposition of the estimated tax burden on labour
income in 2018 for gross wage earnings between 50% and 250% of the average
wage.
(cid:3381) Chapter 5 reviews the main results for 2017, which are summarised in the
comparative tables at the end of the chapter and compares them with the 2018
figures.
(cid:3381) Chapter 6 focuses on the historical trends in the tax burden for the period 2000-
2018.
(cid:120) Part II contains individual country tables specifying the wage levels considered and
the associated tax burdens for eight separate household types, together with
descriptions of each tax/benefit system.
(cid:120) The Annex describes the methodology and its limitations.
The Report has been prepared (cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:50)(cid:40)(cid:38)(cid:39)(cid:182)(cid:86)(cid:3)Centre for Tax Policy and Administration (CTPA)
under the auspices of the Working Party No.2 on Tax Policy Analysis and Tax Statistics (WP2)
of the Committee on Fiscal Affairs. The Report was led by Dominique Paturot and written jointly
with and under the supervision of Michelle Harding, Head of the Tax Data and Statistical
Analysis Unit. The authors would also like to acknowledge Leonie Beisemann for her modelling
and statistical inputs and authoring contributions, Hannah Simon for her authoring contributions
and Michael Sharratt for the data management and dissemination as well as other colleagues in
CTPA: David Bradbury, Bert Brys, Pascal Saint-Amans, Carrie Tyler, Marie-Aurélie Elkurd, and
Karena Garnier for their support and valuable comments. The authors would like to thank the
delegates of Working Party No.2 on Tax Policy Analysis and Tax Statistics and the Committee
on Fiscal Affairs for their inputs. This document has been produced with the financial assistance
of the European Union. The views expressed herein can in no way be taken to reflect the official
opinion of the European Union.
TAXING WAGES 2019 © OECD 2019
TABLE OF CONTENTS (cid:327) 5

Table of contents
Foreword ................................................................................................................................................ 3
Executive Summary ............................................................................................................................ 15
Key findings ....................................................................................................................................... 16
Part I. Tax burden comparisons and trends ..................................................................................... 17
Chapter 1. Overview ........................................................................................................................... 19
Introduction ........................................................................................................................................ 20
Review of results for 2018 ................................................................................................................. 21
Notes .................................................................................................................................................. 40
Chapter 2. Special feature: The taxation of median wage earners ................................................. 41
Introduction ........................................................................................................................................ 41
Differences in the average and median wage in OECD countries ..................................................... 41
Tax burden indicators for workers on the median and average wages, 2017 .................................... 46
Tax burden indicators for low-income workers: contrasting 67% of median and average wages,
2017 ................................................................................................................................................... 52
Comparing the composition of the average tax wedge for 100% and 67% of median and average
wage earnings .................................................................................................................................... 59
Conclusions ........................................................................................................................................ 60
Notes .................................................................................................................................................. 61
References .......................................................................................................................................... 61
Chapter 3. 2018 tax burdens............................................................................................................... 63
Average tax burdens .......................................................................................................................... 64
Marginal tax burdens ......................................................................................................................... 66
Notes .................................................................................................................................................. 68
Chapter 4. Graphical exposition of the 2018 tax burden ................................................................. 89
Notes .................................................................................................................................................. 92
Chapter 5. 2017 tax burdens (and changes to 2018) ....................................................................... 129
Notes ................................................................................................................................................ 133
Chapter 6. Evolution of the tax burden (2000-18) .......................................................................... 147
Historical trends ............................................................................................................................... 148
Important trends ............................................................................................................................... 148
Tax wedge ........................................................................................................................................ 148
Average personal income tax rate .................................................................................................... 149
Net personal average tax rate ........................................................................................................... 150
Progressivity .................................................................................................................................... 151
TAXING WAGES 2019 © OECD 2019
6 (cid:327)(cid:3)TABLE OF CONTENTS

Families ............................................................................................................................................ 152
Notes ................................................................................................................................................ 152
Tables showing the income taxes, social security contributions and cash benefits ......................... 153
Part II. Country details, 2018 ........................................................................................................... 181
Australia (2017-18 Income tax year) ............................................................................................... 183
1. Personal income tax system ......................................................................................................... 186
2. Social security contributions ........................................................................................................ 189
3. Other taxes ................................................................................................................................... 189
4. Universal cash transfers ............................................................................................................... 189
5. Recent changes in the tax/benefit system .................................................................................... 193
6. Memorandum items ..................................................................................................................... 193
Austria ................................................................................................................................................ 199
1. Personal Income Tax ................................................................................................................... 202
2. Compulsory Social Security Contributions to Schemes Operated within the Government
Sector ............................................................................................................................................... 204
3. Universal Cash Transfers ............................................................................................................. 205
4. Main Changes in Tax/Benefit Systems Since 2004 ..................................................................... 205
5. Memorandum Items ..................................................................................................................... 207
Belgium ............................................................................................................................................... 211
1. Personal income tax system ......................................................................................................... 214
2. Compulsory social security contributions to schemes operated within the government sector ... 217
3. Universal cash transfers ............................................................................................................... 219
4. Main changes in the tax/benefit system since 2016 ..................................................................... 219
5. Memorandum Items ..................................................................................................................... 219
Canada ................................................................................................................................................ 225
1. Personal Income Tax Systems ..................................................................................................... 228
2. Compulsory Social Security Contributions to Schemes Operated Within the Government
Sector ............................................................................................................................................... 231
3. Universal Cash Transfers ............................................................................................................. 233
4. Main changes in the Tax/Benefit system since 2009 ................................................................... 234
5. Memorandum Items ..................................................................................................................... 234
Chile .................................................................................................................................................... 239
1. Personal income tax system ......................................................................................................... 242
2. Compulsory social security contributions to schemes operated within the government sector ... 243
3. Universal cash transfers ............................................................................................................... 245
4. Memorandum items ..................................................................................................................... 246
Czech Republic .................................................................................................................................. 249
1. Personal Income Tax System ....................................................................................................... 252
2. Compulsory Social Security Contributions to Schemes Operated within the Government
Sector ............................................................................................................................................... 254
3. Universal Cash Transfers ............................................................................................................. 254
4. Main Changes in Tax/Benefit Systems since 2018 ...................................................................... 256
5. Memorandum Items ..................................................................................................................... 256
Denmark ............................................................................................................................................. 259
TAXING WAGES 2019 © OECD 2019
TABLE OF CONTENTS (cid:327) 7

1. Personal income tax system ......................................................................................................... 262
2. Compulsory Social Security Contributions to Schemes Operated Within the Government
Sector ............................................................................................................................................... 264
3. Universal Cash Transfers ............................................................................................................. 265
4. Main Changes in Tax/Benefit Systems ........................................................................................ 265
5. Memorandum Items ..................................................................................................................... 268
Estonia ................................................................................................................................................ 273
1. Personal income tax system ......................................................................................................... 276
2. Compulsory social security insurance system ............................................................................. 277
3. Payroll tax .................................................................................................................................... 277
4. Universal cash transfers ............................................................................................................... 277
5. Main changes in tax/benefit system since 2005 ........................................................................... 278
6. Memorandum items ..................................................................................................................... 279
Finland ................................................................................................................................................ 281
1. Personal Income Tax System ....................................................................................................... 284
2. Compulsory Social Security Contributions to Schemes Operated within the Government
Sector ............................................................................................................................................... 285
3. Universal Cash Transfers ............................................................................................................. 286
4. Main Changes in the Tax/Benefit System since 2017 ................................................................. 286
5. Memorandum Items ..................................................................................................................... 286
France ................................................................................................................................................. 291
1. Personal income tax system ......................................................................................................... 294
2. Compulsory social security contributions to schemes operated within the government sector ... 296
3. Universal cash transfers ............................................................................................................... 298
4. Main changes in the tax system and social benefits regime since the taxation of 2015 income .. 300
5. Memorandum items ..................................................................................................................... 300
Germany ............................................................................................................................................. 305
1. Personal Income Tax Systems ..................................................................................................... 308
2. Compulsory Social Security Contributions to Schemes Operated Within the Government
Sector ............................................................................................................................................... 310
3. Universal Cash Transfers ............................................................................................................. 312
4. Main Changes in Tax/Benefit Systems Since 1997 ..................................................................... 313
5. Memorandum Items ..................................................................................................................... 314
Greece ................................................................................................................................................. 319
1. Personal income tax system ......................................................................................................... 322
2. Compulsory Social Security Contributions to Schemes operated within the Government Sector326
3. Universal Cash Transfers ............................................................................................................. 327
4. Main Changes in the Tax/benefit System since 2016 .................................................................. 328
5. Memorandum items ..................................................................................................................... 328
Hungary .............................................................................................................................................. 333
1. Personal Income Tax Systems ..................................................................................................... 336
2. Compulsory Social Security Contributions to Schemes Operated within the Government
Sector ............................................................................................................................................... 337
3. Universal cash transfers ............................................................................................................... 338
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8 (cid:327)(cid:3)TABLE OF CONTENTS

4. Main Changes in the Tax/benefit System Since 2010 ................................................................. 338
5. Memorandum Items ..................................................................................................................... 339
Iceland ................................................................................................................................................ 343
1. Personal Income Tax System ....................................................................................................... 346
2. Compulsory Social Security Contributions to Schemes Operated Within the Government
Sector ............................................................................................................................................... 347
3. Universal Cash Transfers ............................................................................................................. 347
4. Main Changes in the Tax/Benefit System Since 1998 ................................................................. 348
5. Memorandum Items ..................................................................................................................... 351
Ireland ................................................................................................................................................ 355
1. Personal income tax systems ....................................................................................................... 358
2. Compulsory Social Security Contributions to Schemes Operated within the Government
Sector. .............................................................................................................................................. 360
3. Universal Cash Transfers ............................................................................................................. 360
4. Other Main Changes in Tax/Benefit System Since 2016 ............................................................ 361
5. Memorandum Items ..................................................................................................................... 361
Israel ................................................................................................................................................... 365
1. Personal income tax system ......................................................................................................... 368
2. Compulsory social security insurance system ............................................................................. 369
3. Payroll taxes ................................................................................................................................. 370
4. Universal cash transfers ............................................................................................................... 370
5. Main changes in the tax and benefit systems since 2002 ............................................................. 371
6. Memorandum items ..................................................................................................................... 372
Italy ..................................................................................................................................................... 377
1. Personal Income Tax ................................................................................................................... 380
2. Compulsory Social Security ........................................................................................................ 383
3. Universal Cash Transfers ............................................................................................................. 384
4. Main Changes .............................................................................................................................. 384
5. Memorandum Item ...................................................................................................................... 385
Japan................................................................................................................................................... 389
1. Personal Income Tax Systems ..................................................................................................... 392
2. Compulsory Social Security Contribution to Schemes Operated Within the Government Sector397
3. Cash Benefits ............................................................................................................................... 398
4. Main changes in the Tax/benefit Systems since 1998 ................................................................. 398
5. Memorandum Item ...................................................................................................................... 400
Korea .................................................................................................................................................. 405
1. Personal Income Tax System ....................................................................................................... 408
2. Compulsory Social Security Contribution to Schemes Operated Within the Government Sector411
3. Universal Cash Transfers ............................................................................................................. 413
4. Main Changes in Tax/Benefit System since 2000 ....................................................................... 413
5. Memorandum Item ...................................................................................................................... 414
Latvia .................................................................................................................................................. 417
1. Personal income tax system ......................................................................................................... 420
2. Compulsory social security contributions to schemes operated within the government sector ... 423
TAXING WAGES 2019 © OECD 2019