Taxing wages 2009-2010 : special feature : wage income tax reforms and changes in tax burdens 2010.

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Taxing Wages 01
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2009-2010
SPECIAL FEATURE: WAGE INCOME TAX REFORMS AND CHANGES
IN TAX BURDENS 2000-2009
Taxing Wages provides unique information on income tax paid by workers and on social security contributions
levied upon employees and their employers in OECD countries. In addition, this annual publication specifi cies
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Taxing Wages 2010 includes a special feature entitled: “Wage income tax reforms and changes in tax burdens: 00
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OECD Tax Statistics (http://dx.doi.org/10.1787/ctpa-twg-data-en). EC
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http://dx.doi.org/10.1787/tax_wages-2010-en
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2010
ISBN 978-92-64-09753-7
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23 2011 12 1 P

Taxing Wages
2009-2010
SPECIAL FEATURE:
WAGE INCOME TAX REFORMS
AND CHANGES IN TAX BURDENS
2010
This work is published on the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of the Organisation or of the governments of its member countries.
Please cite this publication as:
OECD (2011), Taxing Wages 2010, OECD Publishing.
http://dx.doi.org/10.1787/tax_wages-2010-en
ISBN 978-92-64-409753-7 (print)
ISBN 978-92-64-09754-4 (PDF)
ISBN 978-92-64-00000-0 (HTML)
Series/Periodical:
ISSN 1995-3844 (print)
ISSN 2072-5124 (online)
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FOREWORD
Foreword
T
his annual publication provides details of taxes paid on wages in all thirty-four member
countries of the OECD.* The information contained in the Report covers the personal income tax and
social security contributions paid by employees and their employers and cash benefits received by
families. The objective of the Report is to illustrate how personal income taxes and social security
contributions are calculated and to examine how these levies and cash family benefits impact on net
household incomes. The results also allow quantitative cross-country comparisons of labour cost
levels and of the overall tax and benefit position of single persons and families.
The Report shows the amounts of taxes, social security contributions and cash benefits for eight
family-types, which differ by income level and household composition. It also presents the resulting
average and marginal tax rates. Average tax rates show that part of gross wage earnings or total
labour costs which is taken in tax (before and after cash benefits) and social security contributions.
Marginal tax rates show the part of an increase of gross earnings or total labour costs that is paid in
these levies.
The focus of the Report is the presentation of accurate estimates of the tax/benefit position of
employees in the edition year (2010). In addition, the Report shows definitive data on the tax/benefit
position of employees for the year2009. It is important to notethat, starting from the Report’s edition
in2005, the definition of average worker has been broadened from average manual production worker
(ISIC SectorD) to average worker (ISIC SectorsC to K) including both manual and non-manual workers.**
The Report is structured as follows. The Overview at the beginning of the Report reviews the
main results for2010. PartI of the Report (International Comparisons) reviews the main results
for2010and2009. Part I.1reviews the main results for2010, which are summarised in
comparative tables and figures included at the end of that section. PartI.2presents a graphical
exposition of the estimated tax burden on labour income in2010 for gross wage earnings between
50per cent and 250per cent of the average wage. PartI.3reviews the main results for2009, which
are summarized in the comparative tables at the end of that section. PartII of the Report focuses on
the historical trends in the tax burden for the period2000-2010. Country tables specifying the wage
levels considered and the associated tax burdens for eight separate family types are found in PartIII,
together with descriptions of the tax/benefit system of each country. The methodology used – and its
limitations – are set out in PartIV.
The Report has been prepared under the auspices of the Working Party on Tax Policy Analysis
and Tax Statistics of the Committee on Fiscal Affairs and has benefited from financial support
provided by the Commission of the European Communities. It is published on the responsibility of the
Secretary-General of the OECD.
* Previous 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 before1996).
**AnnexD presents historical series using the old definition of the average production worker (1979-2004).
TAXING WAGES 2009-2010 © OECD 2011 3
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TABLE OF CONTENTS
Table of Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2. Review of results for2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Special Feature: Wage Income Tax Reforms and Changes inTaxBurdens: 2000-2009. . 25
1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2. Changes in wage income tax burdens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Annex. Decomposition of the Change in the Average Tax Wedge. . . . . . . . . . . . . . . . . . . 48
Part I
INTERNATIONAL COMPARISONS
Tax Burdens, 2010estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
I.1. Income tax plus employee and employer contributions less cash benefits
Table. By family-type and wage level (as%oflabourcosts), 2010 . . . . . . . . . . . 86
Figure. By family type (as% of labour costs), 2010 . . . . . . . . . . . . . . . . . . . . . . . . . 87
I.2. Income tax plus employee contributions
Table. By family-type and wage level (as%ofgrosswageearnings), 2010. . . . 88
Figure. By family type (as%ofgrosswageearnings), 2010. . . . . . . . . . . . . . . . . . 89
I.3. Income tax plus employee contributions less cash benefits
Table. By family-type and wage level (as%ofgrosswageearnings), 2010. . . . 90
Figure. by family type (as%ofgrosswageearnings), 2010. . . . . . . . . . . . . . . . . . 91
I.4. Income tax
Table. By family-type and wage level (as%ofgrosswageearnings), 2010. . . . 92
Figure. By family type (as%ofgrosswageearnings), 2010. . . . . . . . . . . . . . . . . . 93
I.5. Employee contributions
Table. By family-type and wage level (as%ofgrosswageearnings), 2010. . . . 94
Figure. By family type (as%ofgrosswageearnings), 2010. . . . . . . . . . . . . . . . . . 95
I.6. Marginal rate of income tax plus employee and employer contributions less
cash benefits
Table. By family-type and wage level (as%oflabourcosts), 2010 . . . . . . . . . . . 96
Figure. By family type (as%oflabourcosts), 2010. . . . . . . . . . . . . . . . . . . . . . . . . 97
TAXING WAGES 2009-2010 © OECD 2011 5
TABLE OF CONTENTS
I.7. Marginal rate of income tax plus employee contributions less cash benefits
Table. By family-type and wage level (as%ofgrosswageearnings), 2010. . . . 98
Figure. By family type (as%ofgrosswageearnings), 2010. . . . . . . . . . . . . . . . . . 99
I.8. Increase in net income after 1% increase in gross wage earnings
Table. Byfamily-type and wage level (%), 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . 100
I.9. Increase in net income after 1% increase in labour costs
Table. By family-type and wage level (%), 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . 101
I.10. Annual gross wage and net income
Table. By family-type and wage level (in US dollars using PPP), 2010 . . . . . . . . 102
I.11. Annual labour costs and net income
Table. By family-type and wage level (in US dollars using PPP), 2010 . . . . . . . . 104
Graphical exposition of the2010 estimated tax burden . . . . . . . . . . . . . . . . . . . . . . . . . 106
Tax Burdens, 2009definitive results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
I.12. Income tax plus employee and employer contributions less cash benefits,
by family-type and wage level (as%oflabourcosts), 2009 . . . . . . . . . . . . . . . . . . . 146
I.13. Income tax plus employee contributions,
by family-type and wage level (as%ofgrosswageearnings), 2009. . . . . . . . . . . . 147
I.14. Income tax plus employee contributions less cash benefits,
by family-type and wage level (as%ofgrosswageearnings), 2009. . . . . . . . . . . . 148
I.15. Income tax,
by family-type and wage level (as%ofgrosswageearnings), 2009. . . . . . . . . . . . 149
I.16. Employee contributions,
by family-type and wage level (as%ofgrosswageearnings), 2009. . . . . . . . . . . . 150
I.17. Marginal rate of income tax plus employee and employer contributions
less cash benefits,
by family-type and wage level (as%oflabourcosts), 2009 . . . . . . . . . . . . . . . . . . . 151
I.18. Marginal rate of income tax plus employee contributions less cash benefits,
by family-type and wage level (as%ofgrosswageearnings), 2009. . . . . . . . . . . . 152
I.19. Increase in net income after 1% increase in gross wage earnings,
by family-type and wage level (%), 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
I.20. Increase in net income after 1% increase in labour costs,
by family-type and wage level (%), 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
I.21. Annual gross wage and net income,
by family-type and wage level (in US dollars using PPP), 2009 . . . . . . . . . . . . . . . . 155
I.22. Annual labour costs and net income,
by family-type and wage level (in US dollars using PPP), 2009 . . . . . . . . . . . . . . . . 157
6 TAXING WAGES 2009-2010 © OECD 2011
TABLE OF CONTENTS
Part II
TAX BURDEN TRENDS 2000-2010
1. Historical trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
2. Important trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
3. Tax wedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
4. Average income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
5. Net personal average tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
6. Progressivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
7. Families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
II.1a. Evolution of the tax burden, 2000-2010:
Single persons without children at 67% of average earnings
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
II.1b. Evolution of the tax burden, 2000-2010:
Single persons without children at 67% of average earnings
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
II.1c. Evolution of the tax burden, 2000-2010:
Single persons without children at 67% of average earnings
– Income tax plus employee contributions less cash benefits
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
II.2a. Evolution of the tax burden, 2000-2010:
Single persons without children at 100% of average earnings
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
II.2b. Evolution of the tax burden, 2000-2010:
Single persons without children at 100% of average earnings
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
II.2c. Evolution of the tax burden, 2000-2010:
Single persons without children at 100% of average earnings
– Income tax plus employee contributions less cash benefits
as a % of gross earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
II.3a. Evolution of the tax burden, 2000-2010:
Single persons without children at 167% of average earnings
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
II.3b. Evolution of the tax burden, 2000-2010:
Single persons without children at 167% of average earnings
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
II.3c. Evolution of the tax burden, 2000-2010:
Single persons without children at 167% of average earnings
– Income tax plus employee contributions less cash benefits
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
II.4a. Evolution of the tax burden, 2000-2010:
Single parent with two children at 67% of average earnings
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
TAXING WAGES 2009-2010 © OECD 2011 7
TABLE OF CONTENTS
II.4b. Evolution of the tax burden, 2000-2010:
Single parent with two children at 67% of average earnings
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
II.4c. Evolution of the tax burden, 2000-2010:
Single parent with two children at 67% of average earnings
– Income tax plus employee contributions less cash benefits
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
II.5a. Evolution of the tax burden, 2000-2010:
One-earner married couple with two children at 100% of average earnings
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
II.5b. Evolution of the tax burden, 2000-2010:
One-earner married couple with two children at 100% of average earnings
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
II.5c. Evolution of the tax burden, 2000-2010:
One-earner married couple with two children at 100% of average earnings
– Income tax plus employee contributions less cash benefits
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
II.6a. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 33%
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
II.6b. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 33%
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
II.6c. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 33%
– Income tax plus employee contributions less cash benefits
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
II.7a. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 67%
– Income tax plus employee and employer contributions less cash benefits
as a % of labour costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
II.7b. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 67%
– Income Tax as a % of gross wage earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
II.7c. Evolution of the tax burden, 2000-2010:
Two-earner married couple with two children, one at 100% average earnings
and the other at 67%
– Income tax plus employee contributions less cash beneftis
as a % of gross wage earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
8 TAXING WAGES 2009-2010 © OECD 2011