Taxing Wages 2008

Foreword......Page 5
Table of Contents......Page 7
1. Introduction......Page 13
2.1. Tax wedge......Page 14
Table 0.1. Comparison of total tax wedge......Page 15
Table 0.2. Income tax plus employee and employer social security contributions......Page 17
Figure 0.1. Income tax plus employee and employer social security contributions......Page 18
2.2. Personal average tax rates......Page 16
2.3. Family tax rates......Page 19
Figure 0.2. Percentage of gross wage earnings paid in income tax and employee social security contributions, 2008......Page 20
Table 0.4. Comparison of total tax wedge by family type......Page 21
Figure 0.3. Income tax plus employee contributions less cash benefits, by family-type......Page 23
2.4. Wages......Page 22
Table 0.5. Comparison of wage levels......Page 24
Special Feature: Consumption Taxation as an Additional Burden on Labour Income......Page 25
1. Introduction......Page 26
Figure S.1. Tax mix in OECD countries 2006 (percentage of GDP)......Page 27
5. Household identification......Page 28
Table S.2. Number of observations by family type......Page 30
6. Expenditure identification and allocation of VAT/sales taxes rates and excise duties......Page 29
7. Microsimulation and results......Page 31
Table S.4. Average VAT/sales taxes rates on net income (per cent)......Page 32
Table S.6. Average total consumption tax rate on net income (per cent)......Page 33
Table S.8. Average income tax wedges (per cent)......Page 34
Table S.9. Average total tax wedges (consumption + income) (per cent)......Page 35
Notes......Page 41
Part I. International Comparisons......Page 43
Tax Burdens, 2008 estimates......Page 44
Marginal rates......Page 47
Table I.1. Income tax plus employee and employer contributions less cash benefits,  by family-type and wage level......Page 50
Figure I.1. Income tax plus employee and employer contributions less cash benefits, by family-type......Page 51
Table I.2. Income tax plus employee contributions,  by family-type and wage level......Page 52
Figure I.2. Income tax plus employee contributions, by family-type......Page 53
Table I.3. Income tax plus employee contributions less cash benefits, by family-type and wage level......Page 54
Figure I.3. Income tax plus employee contributions less cash benefits, by family-type......Page 55
Table I.4. Income tax, by family-type and wage level......Page 56
Table I.5. Employee contributions, by family-type and wage levels......Page 58
Table I.6. Marginal rate of income tax plus employee and employer contributions less cash benefits, by family-type and wage level......Page 60
Table I.7. Marginal rate of income tax plus employee contributions less cash benefits, by family-type and wage level......Page 62
Figure I.7. Marginal rate of income tax plus employee contributions less cash benefits, by family-type......Page 63
Table I.8. Increase in net income after 1% increase in gross wage, by family-type and wage level......Page 64
Table I.9. Increase in net income after 1% increase in labour costs, by family-type and wage level......Page 65
Table I.10. Annual gross wage and net income, by family-type and wage level......Page 66
Table I.11. Annual labour costs and net income, by family-type and wage level......Page 68
Graphical Exposition of the 2008 estimated Tax Burden......Page 70
Tax Burdens, 2007 Definitive Results......Page 102
Notes......Page 104
Table I.12. Income tax plus employee and employer contributions, less cash benefits, bye family-type and wage level......Page 105
Table I.13. Income tax plus employee contributions, by family-type and wage level......Page 106
Table I.14. Income tax plus employee contributions less cash benefits, by family-type and wage level......Page 107
Table I.15. Income tax, by family-type and wage level......Page 108
Table I.16. Empoyee contributions, by family-type and wage levels......Page 109
Table I.17. Marginal rate of income tax plus employee and employer contributions less cash benefits, by family-type and wage level......Page 110
Table I.18. Marginal rate of income tax plus employee contributions less cash benefits, by family-type and wage level......Page 111
Table I.19. Increase in net income after 1% increase in gross wage, by family-type and wage level......Page 112
Table I.20. Increase in net income after 1% increase in labour costs, by family-type and wage level......Page 113
Table I.21. Annual gross wage and net income, by family-type and wage level......Page 114
Table I.22. Annual labour costs and net income, by family-type and wage level......Page 116
Part II. Tax Burden Trends 2000-2008......Page 119
Tax wedge......Page 120
Personal average tax rate......Page 121
Net personal average tax rate......Page 122
Families......Page 123
Table II.1a. Evolution of the tax burden, 2000-2008. Single persons without children 
at 67% of average earnings. Income tax plus employee and employer 
contributions less cash benefits as a % of labour costs......Page 124
Table II.1b. Evolution of the tax burden, 2000-2008. Single persons without children 
at 67% of average earnings. Income tax as a % of gross wage earnings......Page 125
Table II.1c. Evolution of the tax burden, 2000-2008. Single persons without children 
at 67% of average earnings. Income tax plus employee contributions less 
cash benefits as a % of gross wage earnings......Page 126
Table II.2a. Evolution of the tax burden, 2000-2008. Single persons without children 
at 100% of average earnings. Income tax plus employee and employer 
contributions less cash benefits as a % of labour costs......Page 127
Table II.2b. Evolution of the tax burden, 2000-2008. Single persons without children 
at 100% of average earnings. Income tax as a % of gross wage earnings......Page 128
Table II.2c. Evolution of the tax burden, 2000-2008. Single persons without children 
at 100% of average earnings. Income tax plus employee contributions less 
cash benefits as a % of gross wage earnings......Page 129
Table II.3a. Evolution of the tax burden, 2000-2008. Single persons without children 
at 167% of average earnings. Income tax plus employee and employer 
contributions less cash benefits as a % of labour costs......Page 130
Table II.3b. Evolution of the tax burden, 2000-2008. Single persons without children 
at 167% of average earnings. Income tax as a % of gross wage earnings......Page 131
Table II.3c. Evolution of the tax burden, 2000-2008. Single persons without children  at 167% of average earnings. Income tax plus employee contributions less  cash benefits as a % of gross wage earnings......Page 132
Table II.4a. Evolution of the tax burden, 2000-2008. 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......Page 133
Table II.4b. Evolution of the tax burden, 2000-2008. Single parent with two children at 67% 
of average earnings. Income tax as a % of gross wage earnings......Page 134
Table II.4c. Evolution of the tax burden, 2000-2008. Single parent with two children 
at 67% of average earnings. Income tax plus employee contributions less 
cash benefits as a % of gross wage earnings......Page 135
Table II.5a. Evolution of the tax burden, 2000-2008. 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......Page 136
Table II.5b. Evolution of the tax burden, 2000-2008. One-earner married couple 
with two children at 100% of average earnings. Income tax as a % 
of gross wage earnings......Page 137
Table II.5c. Evolution of the tax burden, 2000-2008. 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......Page 138
Table II.6a. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 33%. 
Income tax plus employee and employer contributions less cash benefits 
as a % of labour costs......Page 139
Table II.6b. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 33%. 
Income tax as a % of gross wage earnings......Page 140
Table II.6c. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 33%.
Income tax plus employee contributions less cash benefits as a % 
of gross wage earnings......Page 141
Table II.7a. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 67%. 
Income tax plus employee and employer contributions less cash benefits 
as a % of labour costs......Page 142
Table II.7b. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 67%. 
Income tax as a % of gross wage earnings......Page 143
Table II.7c. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with two children, one at 100% of average earnings and the other at 67%. 
Income tax plus employee contributions less cash benefits as a % 
of gross wage earnings......Page 144
Table II.8a. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with no children, one at 100% of average earnings and the other at 33%. 
Income tax plus employee and employer contributions less cash benefits 
as a % of labour costs......Page 145
Table II.8b. Evolution of the tax burden, 2000-2008. Two-earner married couple  with no children, one at 100% of average earnings and the other at 33%.  Income tax as a % of gross wage earnings......Page 146
Table II.8c. Evolution of the tax burden, 2000-2008. Two-earner married couple 
with no children, one at 100% of average earnings and the other at 33%. 
Income tax plus employee contributions less cash benefits as a % 
of gross wage earnings......Page 147
Table II.9. Annual average gross wage earnings, single persons without children,  2000-2008 (US Dollars using PPP)......Page 148
Table II.10. Annual average gross wage earnings, single persons without children,  2000-2008 (national currency)......Page 149
Part III. Country Details, 2008......Page 151
Australia (2007-2008 Income Tax Year)......Page 153
Australia 2008......Page 154
1.1. Federal government income tax......Page 156
3.1. Pay-roll tax......Page 158
4.2. Transfers related to dependent children......Page 159
6.1. Identification of an average worker......Page 160
6.2. Employers’ contribution to private health and pension scheme......Page 162
2008 Parameter values......Page 163
2008 Tax Equations......Page 164
Austria......Page 167
Austria 2008......Page 168
1.1. Central government income tax......Page 170
3.2. Amount for children......Page 172
4. Main Changes in Tax/Benefit Systems Since 1994......Page 173
5.1. Calculation of Earnings Data......Page 174
2008 Parameter values......Page 175
2008 Tax equations......Page 176
Belgium......Page 177
Belgium 2008......Page 178
1.1. Federal government income tax......Page 180
1.2. Local government taxes......Page 181
2.1. Rates and ceiling......Page 182
4. Main changes in the tax/benefit system......Page 184
2008 Parameter values......Page 185
2008 Tax equations......Page 186
Canada......Page 189
Canada 2008......Page 190
1.1. Central/federal government income taxes......Page 192
1.2. State and local income taxes......Page 194
2.1. Employees’ contributions......Page 195
2.2. Employers’ contributions......Page 196
3.2. Transfers for dependent children......Page 197
2008 Parameter values......Page 198
2008 Tax equations......Page 201
Czech Republic......Page 203
Czech Republic 2008......Page 204
1.1. Central government income taxes......Page 206
2.2. Employers’ contributions......Page 207
3.3. Additional transfers......Page 208
2008 Parameter values......Page 209
2008 Tax equations......Page 210
Denmark......Page 211
Danemark 2008......Page 212
1.1. Tax allowances and tax credits......Page 214
1.2. Central government income taxes......Page 215
2.1. Employees’ contributions......Page 216
4. Main Changes in Tax/Benefit Systems......Page 217
5.2. Employers’ contribution to private schemes......Page 218
2008 Parameter values......Page 219
2008 Tax equations......Page 220
Finland......Page 221
Finland 2008......Page 222
1.1. Central government income taxes......Page 224
2.1. Employee contributions......Page 225
5.1. Calculation of average gross annual wage......Page 226
2008 Parameter values......Page 227
2008 Tax equations......Page 228
France......Page 229
France 2008......Page 230
1.1. Tax levied by the central government on 2007 income......Page 232
1.4. Contribution to the reimbursement of social debt (contribution au remboursement de la dette sociale, or CRDS)......Page 234
2.2. Employer contributions......Page 235
4. Main changes in the tax system and social benefits regime since the taxation of 2004 income......Page 236
2008 Parameter values......Page 237
2008 Tax equations......Page 239
Germany......Page 241
Germany 2008......Page 242
1.1. Central/federal government income taxes......Page 244
1.2. State and local income taxes......Page 245
2.1. Employees’ contributions......Page 246
2.2. Employers’ contributions......Page 247
4. Main Changes in Tax/Benefit Systems Since 1997......Page 248
2008 Parameter values......Page 249
2008 Tax equations......Page 250
Greece......Page 251
Greece 2008......Page 252
1.1. Central government income tax......Page 254
Tax schedule for non salaried persons - self employed for income earned in 2008......Page 257
2. Compulsory Social Security Contributions to Schemes operated within the Government Sector......Page 258
3.2. Transfers for dependent children......Page 259
5.1. Identification of an AW and method of calculations used......Page 260
2008 Parameter values......Page 261
2008 Tax equations......Page 262
Hungary......Page 263
Hungary 2008......Page 264
1.1. Central/federal government income taxes......Page 266
2.2. Employers’ contributions......Page 267
5.1. Employer contributions to private social security arrangements......Page 268
2008 Parameter values......Page 269
2008 Tax equations......Page 270
Iceland......Page 271
Iceland 2008......Page 272
1.1. Central government income taxes......Page 274
3.2. Transfers for dependent children......Page 275
4.3. A special tax on higher income......Page 276
5.1. Identification of AW (only five categories) and valuation of earnings......Page 277
2008 Parameter values......Page 278
2008 Tax equations......Page 279
Ireland......Page 281
Ireland 2008......Page 282
1.1. Central/federal government income taxes......Page 284
1.2. State and local income taxes......Page 285
3.2. Transfers for dependent children......Page 286
5.1. Employer contributions to private social security arrangements......Page 287
2008 Parameter values......Page 288
2008 Tax equations......Page 289
Italy......Page 291
Italy 2008......Page 292
1.1. Central government income tax......Page 294
1.2. State and local taxes......Page 296
4. Main Changes......Page 297
2008 Parameter values......Page 298
2008 Tax equations......Page 300
Japan......Page 301
Japan 2008......Page 302
1.1. Central government income tax......Page 304
1.2. State and local income taxes......Page 306
2.1. Employees’ contributions......Page 307
4. Main changes in the Tax/benefit Systems since 1998......Page 308
5.2. Employer contributions to private pension and health schemes......Page 309
2008 Parameter values......Page 310
2008 Tax equations......Page 311
Korea......Page 313
Korea 2008......Page 314
1.1. Central government income tax system......Page 316
1.2. Local income tax......Page 318
3. Universal Cash Transfers......Page 319
5.3. Employer’s reserve for employee’s retirement payment......Page 320
2008 Parameter values......Page 321
2008 Tax equations......Page 322
Luxembourg......Page 323
Luxembourg 2008......Page 324
1.1. Taxes levied by central government......Page 326
3.2. For dependent children......Page 328
5.1. Identification of the average worker......Page 329
2008 Parameter values......Page 330
2008 Tax equations......Page 331
Mexico......Page 333
Mexico 2008......Page 334
1.1. Central government income tax......Page 336
1.2. Employment subsidy credit table......Page 337
4. Main Changes in the Tax/Benefit System since 1995......Page 338
2008 Parameter values......Page 339
Notes......Page 340
Netherlands......Page 341
Netherlands 2008......Page 342
1.1. Central government income tax......Page 344
2.2. Employers’ contributions......Page 346
4. Main Changes in the Tax/Benefit Systems Since 2000......Page 347
5.2. Main employers’ contributions to private pension, health and related schemes......Page 348
2008 Parameter values......Page 349
2008 Tax equations......Page 350
New Zealand......Page 351
New Zealand  2008......Page 352
1.1. Central/federal government income taxes......Page 354
3.4. In Work Tax Credit......Page 355
2008 Parameter values......Page 356
2008 Tax equations......Page 357
Norway......Page 359
1.2. Local government income tax......Page 362
2.1. Contributions to the national insurance scheme......Page 363
4. Main Changes in Tax/Benefit Systems Since 2002......Page 364
2008 Parameter values......Page 365
2008 Tax equations......Page 366
Poland......Page 367
Poland 2008......Page 368
1.1. Central government income tax......Page 370
1.3. Wealth tax......Page 371
4. Main Changes in Tax/benefit Systems Since 2007......Page 372
2008 Parameter values......Page 373
Notes......Page 374
Portugal......Page 375
Portugal 2008......Page 376
1.1. Taxes levied by central government......Page 378
3.1. Benefits for dependent children......Page 381
5.1. Method used to identify and compute gross wages of the average worker......Page 382
2008 Parameter values......Page 383
2008 Tax equations......Page 384
Slovak Republic......Page 385
Slovak Republic 2008......Page 386
1.1. Central government income taxes......Page 388
1.2. State and local income tax......Page 389
2.2. Employers’ contributions......Page 390
3.3. Transfers related to social status......Page 391
5.1. Identification of AW and valuation of earnings......Page 392
2008 Parameter values......Page 393
2008 Tax equations......Page 394
Spain......Page 395
Spain 2008......Page 396
1.1. Central government income tax......Page 398
2.2. Employers’ contributions......Page 400
5.1. Identification of an AW and calculation of earnings......Page 401
2008 Parameter values......Page 402
2008 Tax equations......Page 403
Sweden......Page 405
Sweden 2008......Page 406
1.1. Central government income taxes......Page 408
2.2. Employers’ contributions......Page 410
4. Main Changes in Tax/Benefit Systems Since 1998......Page 411
5.2. Employer contributions to private health, pension, etc. schemes......Page 412
2008 Parameter values......Page 413
2008 Tax equations......Page 414
Switzerland......Page 415
Switzerland 2008......Page 416
1.1. Income tax collected by the federal government (Confederation)......Page 418
1.2. Taxes levied by decentralised authorities (Canton and commune of Zurich)......Page 420
2.2. Employer contributions......Page 422
5.2. Method of calculation used......Page 423
2008 Parameter values......Page 424
2008 Tax equations......Page 426
Turkey......Page 427
Turkey 2008......Page 428
1.1. Central government income tax......Page 430
2.1. Employees’ contributions......Page 431
5.2. Contribution to private pension and health schemes......Page 432
2008 Parameter values......Page 433
2008 Tax equations......Page 434
United Kingdom......Page 435
United Kingdom 2008......Page 436
1.1. Central government income taxes......Page 438
2.2. Employers’ contributions......Page 439
4.2. Employers’ contributions to private pension, health etc. schemes......Page 440
2008 Parameter values......Page 441
2008 Tax equations......Page 442
United States......Page 443
United States 2008......Page 444
1.1. Central/federal government income taxes......Page 446
1.2. State and local income taxes......Page 448
5.1. Identification of an AW at the wage calculation......Page 449
5.2. Employer contributions to private social security arrangements......Page 450
2008 Parameter values......Page 451
2008 Tax equations......Page 452
Part IV. Methodology and Limitations......Page 453
Industry sectors covered......Page 454
Table IV.1. Terminology......Page 455
Full-time worker......Page 456
The treatment of (non-cash) fringe benefits......Page 457
3. Estimating gross wage earnings in 2008......Page 458
Table IV.3. Method used to calculate average earnings......Page 459
4. Coverage of taxes and benefits......Page 460
Table IV.5. Characteristics of taxpayers......Page 461
6. Calculation of personal income taxes......Page 462
8. Social security contributions......Page 466
Table IV.7. State and local personal income taxes, 2005......Page 467
10. Church tax......Page 468
12. Payable tax credits......Page 469
13. The calculation of marginal tax rates......Page 470
1. General limitations......Page 471
3. Limitations to time-series comparisons......Page 472
A note on the tax equations......Page 474
Notes......Page 475
Annexes......Page 477
Table A.1. Tax revenues expressed as a percentage of GDP at market prices, 1990-2006......Page 478
Table A.2. Tax revenues from personal income taxes as a percentage of GDP and total taxation, 1990-2006......Page 479
Source of Earnings Data......Page 480
Warning......Page 482
Table D.1. Income tax plus employee and employer contributions (as % of labour costs), 1979-2004 single persons without children......Page 483
Table D.2. Income tax (in % of gross wage), 1979-2004 single persons without children......Page 484
Table D.3. Income tax plus employee contributions (in % of gros wage), 1979-2004, single persons without children......Page 485
Table D.4. Income tax plus employee and employer contributions less cash benefits (as % of labour costs), 1979-2004 one-earner family with two children......Page 486
Table D.5. Income tax (as % of gross wage), 1979-2004, one-earner family with two children......Page 487
Table D.6. Income tax plus employee contributions less cash benefits (as % of gross wage), 1979-2004, one-earner family with two children......Page 488