The OECD’s Taxing Wages 2014 publication finds that the “personal income tax has risen in 25 of the 34 OECD countries in the past three years,” with the United States being one of those countries.
Since 2005, the U.S. has seen its average taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. burden on employment income increase from 29.8 percent to 31.3 percent, largely due to the expiration of the lower rate on payroll taxes at the start of 2013.
When comparing the U.S. to the OECD, the U.S. tax wedgeA tax wedge is the difference between total labor costs to the employer and the corresponding net take-home pay of the employee. It is also an economic term that refers to the economic inefficiency resulting from taxes. on labor of 31.3 percent (the percent of labor cost that is due to taxes) is below the OECD average of 35.9 percent.
It’s important to remember that this comparison is for an average wage income earner. The U.S. taxes average wages at a lower rate than many OECD countries partly because the U.S. relies on high income earners more than any other country in the OECD.
In the U.S., the top 10 percent of taxpayers earn 33.5 percent of the income, but pay 45.1 percent of the taxes. Compare this with France, where high income earners make 25.5 percent of the income, but only pay 28 percent of the taxes, or the United Kingdom where the top decile earns 32.3 percent of the income, but pays 38.6 percent of the taxes.
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