Where is the Work Taxed the Most?

April 15, 2016
Excel Sheet

Belgium taxes the work the most within the OECD countries, according to the organization’s new Taxing Wages 2016 report. A childless, single worker earning the average national wage in Belgium has an average tax wedge of over 55%! At the other end of the scale, average earners in Chile pay just 7% tax.

The tax wedge refers to personal income tax, employer and employee social security contributions, minus family benefits received as a proportion of total employer labour costs.

Across the OECD, the tax wedge on the average worker was 35.9% in 2015 – the same as the year before.

The percentage of labour costs paid in income tax varies considerably within OECD countries. The lowest figures are in Chile (zero) and Korea (4.9%). The highest values are in Denmark (35.8%), with Australia, Belgium and Iceland all over 20%.

The percentage of labour costs paid in employee social security contributions also varies widely ranging from zero in Australia, Denmark and New Zealand to 17.2% in Germany and 19.0% in Slovenia.

Employers in France pay 27.5% of total labour costs in social security contributions, the highest amongst OECD countries.