Wednesday, March 29, 2006
Tweet[IWS] OECD: TAX WEDGES Vary Sharply by Country [29 March 2006]
IWS Documented News Service
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Institute for Workplace Studies Professor Samuel B. Bacharach
School of Industrial & Labor Relations Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor Stuart Basefsky
New York, NY 10016 Director, IWS News Bureau
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Tax Wedges vary sharply in OECD countries [29 March 2006]
http://www.oecd.org/document/38/0,2340,en_2649_201185_36371174_1_1_1_1,00.html
29/03/2006 - Belgium, Germany and Hungary impose the highest taxes among OECD countries on the pay of a single person on average earnings, while Korea, Mexico and New Zealand take the least, according to the latest edition of the OECD's annual publication Taxing Wages.
For a single-earner married couple with two children on average earnings, by contrast, Turkey, Sweden and Poland impose the biggest 'tax wedge', while Ireland, Iceland and the United States take the smallest slice in tax. Taxing Wages compares the shares of employee earnings taken by governments in OECD countries through taxation by calculating what it calls the 'tax wedge', the difference between labour costs to the employer and the net take-home pay of the employee, including any cash benefits from government welfare programmes.
In 2005, single individuals without children earning the average wage in services and manufacturing industries faced a tax wedge of 55.4% of the cost of their labour to their employers in Belgium, 51.8% in Germany and 50.5% in Hungary, compared with 17.3% in Korea, 18.2% in Mexico and 20.5% in New Zealand. The average for OECD countries was 37.3%.
See Table 1.
http://www.oecd.org/dataoecd/50/41/36371703.pdf
For a one-earner married couple with two children on average earnings, the tax wedge ranged from 42.7% in Turkey, 42.4% in Sweden and 42.1% in Poland to 11.9% in the United States, 11% in Iceland and 8.1 % in Ireland. The average for OECD countries was 27.7%.
See Table 2
http://www.oecd.org/dataoecd/50/39/36371872.pdf
These tax wedges result from the combined effects of a range of policy instruments at the disposal of governments: personal income tax, employee and employer social security contributions, payroll taxes and cash benefits. Variations in their levels reflect the differing priorities of governments and voters in different countries with respect to the desired level, composition and financing method of government expenses, including social benefits.
Tax wedges have shrunk over the past few years in most OECD countries, partly reflecting governments' desire to get more people into work so as to offset the effects on output and prosperity of ageing populations. However, these tax cuts have been limited by the need to maintain sufficient government revenues. In 2000, the average tax wedge for single persons without children was 37.9%, with Belgium at the top end of the range, with 57.1%, and Korea and Mexico at the bottom end, with 16.4% and 16.8% respectively.
Some countries have focused their tax wedge reductions on lower paid workers, as this is the group that often experiences particularly high unemployment rates.
Table 3
http://www.oecd.org/dataoecd/50/38/36371880.pdf
shows that the reductions in the tax wedge for single workers earning two-thirds of the average wage have fallen particularly sharply since 2000 in France (47.4% to 41.4%), Hungary (48.5% to 42.9%) and the Slovak Republic (40.6% to 35.3%).
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky *
Director, IWS News Bureau *
Institute for Workplace Studies *
Cornell/ILR School *
16 E. 34th Street, 4th Floor *
New York, NY 10016 *
*
Telephone: (607) 255-2703 *
Fax: (607) 255-9641 *
E-mail: smb6@cornell.edu *
****************************************
_______________________________
Institute for Workplace Studies
School of Industrial & Labor Relations
Cornell University
16 East 34th Street, 4th floor
New York, NY 10016
________________________________________________________________________
Tax Wedges vary sharply in OECD countries [29 March 2006]
http://www.oecd.org/document/38/0,2340,en_2649_201185_36371174_1_1_1_1,00.html
29/03/2006 - Belgium, Germany and Hungary impose the highest taxes among OECD countries on the pay of a single person on average earnings, while Korea, Mexico and New Zealand take the least, according to the latest edition of the OECD's annual publication Taxing Wages.
For a single-earner married couple with two children on average earnings, by contrast, Turkey, Sweden and Poland impose the biggest 'tax wedge', while Ireland, Iceland and the United States take the smallest slice in tax. Taxing Wages compares the shares of employee earnings taken by governments in OECD countries through taxation by calculating what it calls the 'tax wedge', the difference between labour costs to the employer and the net take-home pay of the employee, including any cash benefits from government welfare programmes.
In 2005, single individuals without children earning the average wage in services and manufacturing industries faced a tax wedge of 55.4% of the cost of their labour to their employers in Belgium, 51.8% in Germany and 50.5% in Hungary, compared with 17.3% in Korea, 18.2% in Mexico and 20.5% in New Zealand. The average for OECD countries was 37.3%.
See Table 1.
http://www.oecd.org/dataoecd/50/41/36371703.pdf
For a one-earner married couple with two children on average earnings, the tax wedge ranged from 42.7% in Turkey, 42.4% in Sweden and 42.1% in Poland to 11.9% in the United States, 11% in Iceland and 8.1 % in Ireland. The average for OECD countries was 27.7%.
See Table 2
http://www.oecd.org/dataoecd/50/39/36371872.pdf
These tax wedges result from the combined effects of a range of policy instruments at the disposal of governments: personal income tax, employee and employer social security contributions, payroll taxes and cash benefits. Variations in their levels reflect the differing priorities of governments and voters in different countries with respect to the desired level, composition and financing method of government expenses, including social benefits.
Tax wedges have shrunk over the past few years in most OECD countries, partly reflecting governments' desire to get more people into work so as to offset the effects on output and prosperity of ageing populations. However, these tax cuts have been limited by the need to maintain sufficient government revenues. In 2000, the average tax wedge for single persons without children was 37.9%, with Belgium at the top end of the range, with 57.1%, and Korea and Mexico at the bottom end, with 16.4% and 16.8% respectively.
Some countries have focused their tax wedge reductions on lower paid workers, as this is the group that often experiences particularly high unemployment rates.
Table 3
http://www.oecd.org/dataoecd/50/38/36371880.pdf
shows that the reductions in the tax wedge for single workers earning two-thirds of the average wage have fallen particularly sharply since 2000 in France (47.4% to 41.4%), Hungary (48.5% to 42.9%) and the Slovak Republic (40.6% to 35.3%).
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
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# posted by SBasefsky : 5:02 PM
