December 9, 2013

Tax Wedge on Average Income, OECD, 2000-2012

Table 1: Tax Wedge on Average Income, OECD, 2000 – 2012

The Tax Wedge, or Combined Tax Rate of Personal Income Tax, Payroll, and Employer Portion of Payroll Tax as Percent of Income at the Average Labor Income by OECD Country, 2000 – 2012

OECD Country
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Israel
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
30.4% 27.6% 28.0% 28.2% 28.2% 28.5% 27.9% 27.3% 26.9% 27.2% 26.8% 26.7% 27.2%
47.3% 0.0% 0.0% 47.4% 48.1% 48.0% 48.3% 48.6% 49.0% 48.9% 48.2% 48.5% 48.9%
57.1% 56.7% 56.3% 55.7% 55.4% 55.5% 55.5% 55.6% 55.9% 56.0% 55.9% 56.1% 56.0%
33.2% 32.0% 32.1% 32.0% 32.0% 31.9% 31.9% 31.2% 31.3% 30.8% 30.5% 30.7% 30.8%
7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
42.6% 42.6% 43.0% 43.2% 43.5% 43.7% 42.5% 42.9% 43.4% 42.4% 42.1% 42.6% 42.4%
44.1% 43.3% 42.4% 42.4% 41.0% 40.9% 41.0% 41.1% 40.9% 38.9% 38.6% 38.8% 38.9%
41.3% 41.0% 42.1% 42.3% 41.5% 39.9% 39.0% 39.0% 38.4% 40.4% 40.1% 40.3% 40.4%
47.8% 46.4% 45.9% 45.0% 44.5% 44.6% 44.0% 43.9% 43.8% 42.5% 42.3% 42.3% 42.5%
49.6% 49.8% 49.8% 49.8% 49.9% 50.0% 50.1% 49.2% 49.7% 50.2% 49.8% 49.9% 50.2%
52.9% 51.9% 52.5% 53.2% 52.2% 52.1% 52.3% 51.9% 51.5% 49.7% 49.2% 49.8% 49.7%
35.2% 34.7% 35.1% 35.2% 35.8% 35.2% 35.8% 37.0% 41.0% 41.9% 39.1% 42.4% 41.9%
54.6% 55.8% 53.7% 50.8% 51.8% 51.1% 52.0% 54.5% 54.1% 49.4% 46.6% 49.5% 49.4%
26.2% 26.9% 28.5% 29.3% 29.8% 29.7% 29.5% 28.1% 30.9% 34.5% 33.4% 34.1% 34.5%
35.2% 31.3% 29.7% 29.8% 30.7% 31.0% 29.2% 27.2% 22.3% 25.9% 25.8% 25.8% 25.9%
29.0% 29.5% 30.0% 27.1% 25.3% 24.9% 23.5% 24.1% 21.7% 19.2% 19.4% 19.4% 19.2%
46.9% 46.4% 46.4% 45.7% 46.0% 45.7% 45.9% 46.2% 46.6% 47.6% 47.2% 47.6% 47.6%
24.8% 24.9% 30.5% 27.4% 27.3% 27.7% 28.8% 29.3% 29.5% 31.2% 30.2% 30.8% 31.2%
16.3% 16.4% 16.1% 16.3% 17.0% 17.3% 18.1% 19.7% 20.0% 21.0% 20.1% 20.5% 21.0%
37.5% 35.8% 32.9% 33.5% 33.9% 34.7% 35.3% 36.3% 34.7% 35.8% 34.3% 36.2% 35.8%
12.6% 13.2% 15.8% 16.8% 15.3% 14.7% 15.0% 15.9% 15.1% 19.0% 15.5% 18.7% 19.0%
39.7% 37.2% 37.4% 37.1% 38.8% 38.9% 38.3% 38.2% 39.2% 38.6% 38.1% 38.0% 38.6%
19.4% 19.4% 19.4% 19.5% 19.6% 19.9% 20.2% 20.8% 20.5% 16.4% 17.0% 15.9% 16.4%
38.6% 39.2% 38.6% 38.1% 38.1% 37.2% 37.4% 37.5% 37.6% 37.6% 37.3% 37.6% 37.6%
38.2% 38.0% 38.0% 38.2% 38.4% 38.7% 39.0% 38.2% 34.7% 35.5% 34.2% 34.3% 35.5%
37.3% 36.4% 37.6% 37.4% 37.4% 36.8% 37.1% 37.7% 36.9% 36.7% 37.1% 38.0% 36.7%
41.9% 42.5% 42.1% 42.5% 42.2% 38.0% 38.3% 38.4% 38.8% 39.6% 37.9% 38.8% 39.6%
46.3% 46.2% 46.1% 46.2% 46.3% 45.6% 45.3% 43.3% 42.9% 42.3% 42.5% 42.6% 42.3%
38.6% 38.9% 39.1% 38.6% 38.8% 39.0% 39.1% 39.0% 38.0% 41.4% 39.7% 40.0% 41.4%
50.1% 49.1% 47.8% 48.2% 48.4% 48.1% 47.8% 45.3% 44.8% 42.8% 42.8% 42.8% 42.8%
21.6% 21.6% 21.7% 21.2% 20.9% 20.9% 20.9% 21.1% 21.4% 21.5% 21.6% 21.9% 21.5%
40.4% 43.6% 42.5% 42.2% 42.8% 42.8% 42.7% 42.7% 39.9% 38.2% 37.9% 38.2% 38.2%
32.6% 32.2% 32.3% 33.8% 33.9% 33.9% 34.0% 34.1% 32.8% 32.3% 32.6% 32.7% 32.3%
30.4% 30.3% 30.1% 29.9% 29.8% 29.7% 29.9% 29.7% 30.5% 29.6% 30.5% 29.6% 29.6%

Source: OECD Tax Database

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A 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.

A 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.

A payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue.