Tuesday, April 11, 2006

Tax Wedgies

Interesting bit on taxes, via the FB.

Belgium, Germany and Hungary impose the highest taxes among OECD countries on the pay of a single person on average earnings, while Korea, Mexico and New Zealand take the least, according to the latest edition of the OECD’s annual publication Taxing Wages.

For a single-earner married couple with two children on average earnings, by contrast, Turkey, Sweden and Poland impose the biggest ‘tax wedge’, while Ireland, Iceland and the United States take the smallest slice in tax. Taxing Wages compares the shares of employee earnings taken by governments in OECD countries through taxation by calculating what it calls the ‘tax wedge’, the difference between labour costs to the employer and the net take-home pay of the employee, including any cash benefits from government welfare programmes.

In 2005, single individuals without children earning the average wage in services and manufacturing industries faced a tax wedge of 55.4% of the cost of their labour to their employers in Belgium, 51.8% in Germany and 50.5% in Hungary, compared with 17.3% in Korea, 18.2% in Mexico and 20.5% in New Zealand. The average for OECD countries was 37.3%. See Table 1.

For a one-earner married couple with two children on average earnings, the tax wedge ranged from 42.7% in Turkey, 42.4% in Sweden and 42.1% in Poland to 11.9% in the United States, 11% in Iceland and 8.1 % in Ireland. The average for OECD countries was 27.7%


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