April 26, 2018 / 9:33 AM / 24 days ago

Tax burden on wages rose in most OECD countries in 2017

PARIS (Reuters) - Workers’ tax burden crept higher in most OECD countries last year, averaging slightly more than a quarter of gross wages, the Organisation for Economic Cooperation and Development said on Thursday.

The average masked wide divergences with rates ranging from 40.5 percent in Belgium and 39.9 percent in Germany to 7 percent in Chile and 14.5 percent in Korea, the OECD said in its annual Taxing Wages report.

The net personal average tax rate - income tax and workers’ social security contributions minus family benefits received, as a percent of gross wages - rose in 20 out of the OECD’s 35 member countries mainly due to higher wages reducing the impact of tax-free allowances and credits.

The OECD found taxes were significantly lower for households with children due to cash transfers to parents. A one-earner married couple with two children on average paid 14 percent of gross wages.

The tax benefit of having children has also increased since 2000, especially for single parents, who in 13 countries receive more than they pay into the system.

Taking into account taxes also paid by employers, the total tax burden of labor fell last year on average for the fourth year in a row due to lower employer social security contributions, according to the OECD.

Finland, Hungary and Luxembourg in particular saw big decreases in the so-called tax wedge - income tax and employers payroll taxes - while the average fell in 16 countries.

Reporting by Leigh Thomas; editing by Richard Lough

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