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| Data: OECD - Taxing Wages 2017 Database (SSC = Social Security Contribution). |
The Organization for Economic Cooperation and Development (OECD) analyzes how 35 countries tax wage-earners, making it possible to compare tax burdens across the world’s biggest economies. Each year, the OECD measures what it calls the tax wedge, the gap between what a worker gets paid and what they actually spend or save. Included are income taxes, payroll taxes, and any tax credits or rebates that supplement worker income. Excluded are the countless other ways that governments levy taxes, such as sales and value-added taxes, property taxes, and taxes on investment income and gains.
The highest average tax wedges for childless single workers earning the average national wage were in Belgium (54.0%), Germany (49.4%) and Hungary (48.2%). The lowest were in Chile (7%), New Zealand (17.9%) and Mexico (20.1%). The United States are in the bottom third (31.7%) - considerably below the OECD-average (36.0%). A single worker earning an average wage in Belgium ends up paying a tax rate almost eight times higher than the average single worker in Chile.
The tax wedge for families with children is lower than that for single individuals without children in all OECD countries except in Chile and Mexico, where both family types face the same tax levels. No Personal Income Tax is payable at the average wage level in Chile and no tax provisions for families with children exist in Mexico. The differences are particularly large in Canada, the Czech Republic, Germany, Ireland, Luxembourg and Slovenia.