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Share of labor costs taken
by tax and social security contributions
(chart
4.3)
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This series measures the difference between the salary cost of an average
worker to their employer and the amount of disposable income (net wage)
that they receive. Labor costs are gross wages plus employer
social security contributions and payroll taxes. The taxes
included are income taxes paid by the employee, employee social security
contributions, employer social security contributions, and, where in
effect, payroll taxes. The types of taxes included in the measure are
fully comparable across countries, as they are based on common
definitions agreed upon by all OECD countries.
Because income taxes and access to work-related cash benefits vary by family status and
in complex ways in nearly all countries, simple cross-country comparisons
require a restriction to workers with a common family status. The figures
presented in chart 4.3 pertain to single persons without children at the income
of the average worker.
The information on the average worker income level is supplied by the ministries of
finance in all OECD countries and is based on national statistical surveys. The
amount of taxes paid by the worker is calculated by applying the tax laws of the
country concerned. Thus, the tax rates are the result of a modeling exercise
rather than direct observation of taxes actually paid.
Source: OECD, Taxing Wages Database, <http://www.oecd.org>.
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