Foreword

Taxing Wages1 is an annual publication that provides details of taxes paid on wages in the 38 member countries of the OECD. 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 family benefits impact on net household incomes. The results also allow quantitative cross-country comparisons of labour costs and of the overall tax and benefit position of different household types.

The Report shows the amount 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 the share of gross wage earnings or total labour costs that is taken in personal income taxes (before and after cash benefits), social security contributions and payroll taxes. Marginal tax rates show the share of an increase in gross earnings or total labour costs that is paid in these levies.

The Report presents new data on the tax/benefit position of employees in 2022, which it compares with corresponding data for the year 2021. The average worker is designated as a full-time employee (including manual and non-manual workers) 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:

• Part I (Tax burden comparisons and trends) includes six chapters:

  • Chapter 1 contains an overview of the main results for 2022.

  • Chapter 2 contains the Special Feature on “Indexation of labour taxation and benefits in the OECD”.

  • Chapter 3 reviews the main results for 2022, which are summarised in comparative tables and figures included at the end of that chapter.

  • Chapter 4 presents a graphical exposition of the estimated tax burden on labour income in 2022 for gross wage earnings between 50% and 250% of the average wage.

  • Chapter 5 provides comparative tables showing the main results for 2021.

  • Chapter 6 shows historical trends in the tax burden for the period 2000-2022.

• 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 country’s tax/benefit system.

• The Annex describes the Taxing Wages methodology and its limitations.

The Report has been prepared by the OECD’s Centre for Tax Policy and Administration (CTPA) under the auspices of Working Party No.2 on Tax Policy Analysis and Tax Statistics (WP2) of the Committee on Fiscal Affairs. The Report was led by Leonie Cedano under the supervision of Alexander Pick, Acting Head of the Tax Data and Statistical Analysis Unit. The Special Feature was authored by Alexander Pick with statistical and analytical support from Leonie Cedano. The authors would like to acknowledge Michael Sharratt for his role in data management and dissemination and Violet Sochay for the publication formatting. The authors would like to thank other colleagues in CTPA for their support and valuable comments: David Bradbury, Bert Brys, Richard Clarke, Karena Garnier, Grace Perez-Navarro, Sarah Perret, Carrie Tyler and Kurt Van Dender. The authors would also like to thank the delegates of WP2 for their inputs. The development of the Taxing Wages models used in this Report was funded by the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union.

Note

← 1. Earlier editions were published under the title The Tax/Benefit Position of Employees (1996 – 1998 editions) and The Tax/Benefit Position of Production Workers (editions published before 1996).