Taxing Wages 2008

This annual publication provides details of taxes paid on wages in all thirty 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.

Taxing Wages provides unique information on income tax paid by workers and social security contributions levied on employees and their employers in OECD countries. In addition, this annual publication specifies family benefits paid as cash transfers. Amounts of taxes and benefits are detailed program by program, for eight household types which differ by income level and household composition. Results reported include the marginal and effective tax burden for one- and two-earner families, and total labour costs of employers.



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.

Table of Contents
Overview
1. Introduction
2. Review of results for 2008
Special Feature: Consumption Taxation as an Additional Burden on Labour Income
1. Introduction
2. Tax mixes in OECD countries
3. A methodology for consumption taxes in Taxing Wages
4. Availability and characteristics of Household Budget Survey data
5. Household identification
6. Expenditure identification and allocation of VAT/sales taxes ratesand excise duties
7. Micro-simulation and results
8. Conclusions
Notes
Part I. International Comparisons
Tax Burdens, 2008 estimates
Graphical Exposition of the 2008 estimated Tax Burden
Tax Burdens, 2007 Definitive Results
Part II. Tax Burden Trends 2000-2008
Historical trends
Important trends
Tax wedge
Personal average tax rate
Net personal average tax rate
Progressivity
Families
Part III. Country Details, 2008
Part IV. METHODOLOGY AND LIMITATIONS
Methodology
1. Introduction
2. Calculation of gross wage earnings
3. Estimating gross wage earnings in 2008
4. Coverage of taxes and benefits
5. Taxpayer characteristics
6. Calculation of personal income taxes
7. State and local income taxes
8. Social security contributions
9. Payroll taxes
10. Church tax
11. Family cash benefits from general government
12. Payable tax credits
13. The calculation of marginal tax rates Limitations
1. General limitations
2. Some specific limitations on the income tax calculation
3. Limitations to time-series comparisons
A note on the tax equations
Annex A. Overall Tax Levels and Tax Structures in OECD Member Countries, 1990-2005
Annex B. Source of Earnings Data
Annex C. Exchange Rates and Purchasing Power Parities of National Currencies, 2008
Annex D. Historical Series under the Old Definition of Average Worker