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OECD Personal Tax Burden Crept Higher Still In 2017

by Ulrika Lomas, Tax-News.com, Brussels

27 April 2018


Belgium, Denmark, and Germany have the highest personal income tax burdens, at over 35 percent, among OECD countries, according to the latest OECD Taxing Wages report, which says that just over half of countries made small increases to their average personal tax rates last year.

Taxing Wages 2018 shows that the "net personal average tax rate" – income tax and social security contributions paid by employees, minus any family benefits received, as a share of gross wages – was 25.5 percent across the OECD. This OECD-wide average rate, calculated for a single person with no children earning an average wage, has remained stable in recent years. The lowest tax burdens were in Chile, Korea, and Mexico.

According to the OECD, increases in the average personal tax rate in 20 of the OECD's 35 member countries in 2017 were mainly due to wage increases that reduced the impact of tax-free allowances and credits. Average tax rates fell in 13 countries and were unchanged in two (Chile and Hungary). The biggest increases to the tax rate were in the Czech Republic (0.5 percentage points), Turkey (0.5 percentage points) and Mexico (0.4 percentage points), and the largest decreases were in Luxembourg (-2 percentage points), Finland (-0.6 percentage points), and Iceland (-0.5 percentage points).

If taxes and costs paid by employers are also considered, Taxing Wages 2018 shows that overall taxes on labor costs decreased on the average worker for the fourth consecutive year in 2017, due to lower employer social security contributions.

In 2017, the highest average net personal average tax rates for single workers with no children earning the average wage were in Belgium (40.5 percent), Germany (39.9 percent) and Denmark (35.8 percent). The lowest were in Chile (seven percent), Mexico (11.2 percent) and Korea (14.5 percent).

TAGS: tax | Belgium | Chile | Denmark | Hungary | Iceland | employees | Luxembourg | Mexico | tax rates | social security | Czech Republic | Finland | Germany | Korea, South | Turkey | Tax

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