By: Phil Froats
The OECD has just released statistics indicating how much governments took in taxes from wage earners in 2008. It calculates 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 programs.” The higher the tax wedge, the less the employee takes home. In Belgium, Hungary and Germany, the average single employee takes home less than half of the total cost to the employer. in another nine countries, all in Europe, the tax wedge is between 40% and 50% which translates to the employee to taking home less than 60% of gross wages. With a tax wedge of 31.3% in Canada, a single employee does relatively well taking home almost 69% of gross wages. So according to my calculations from the table below, a person who makes $50,000 per year in Belgium would their tax burden decline from $28,000 to $15,650 by moving to Canada. A move to Mexico would result in a reduction in taxes to $7,550.
| Country | Tax Wedge % |
| Belgium | 56.0 |
| Hungary | 54.0 |
| Germany | 52.0 |
| France | 49.3 |
| Austria | 48.8 |
| Italy | 46.5 |
| Netherlands | 45.0 |
| Sweden | 44.6 |
| Finland | 43.5 |
| Czech Rep. | 43.4 |
| Greece | 42.4 |
| Denmark | 41.2 |
| Turkey | 39.7 |
| Poland | 39.7 |
| Slovak Rep. | 38.9 |
| Spain | 37.8 |
| Norway | 37.7 |
| Portugal | 37.6 |
| Luxembourg | 35.9 |
| UK | 32.8 |
| Canada | 31.3 |
| USA | 30.1 |
| Japan | 29.5 |
| Switzerland | 29.5 |
| Iceland | 28.3 |
| Australia | 26.9 |
| Ireland | 22.9 |
| New Zealand | 21.2 |
| Korea | 20.3 |
| Mexico | 15.1 |
One Response to “ Take Home Pay in OECD Countries ”
Without the associated provincial/state tax rates for each country, these figures are rather meaningless. For example, the income tax obligation of an employee in California is far higher than that of an employee Alberta. Conversely, the income tax obligation of an employee in Florida is far lower than that of an employee in Quebec.
By TW on May 13, 2009