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1 Cristina Enache, A Comparison of the Tax Burden on Labor in the OECD 1 (2021)

handle is hein.taxfoundation/csnotetx0001 and id is 1 raw text is: A Comparison of the Tax Burden on Labor in the OECD FISCAL FACT No. 764 May 2021 Cristina Enache Economist Key Findings The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels We are a 501(c)(3) nonprofit organization. ©2021 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 . Average wage earners in the OECD have their take-home pay lowered by two major taxes: individual income and payroll (both employee and employer side). . Value-added (VAT) and sales taxes also place a tax burden on take-home pay used for consumption. . Before accounting for VAT and sales tax, the average tax burden a single average wage earner faced in the OECD was 34.6 percent of pretax earnings in 2020. The average OECD tax burden on labor has dropped 1.8 percentage points over the past two decades. . The average tax burden among OECD countries varies substantially. In 2020, a worker in Belgium faced a tax burden seven times higher than that of a Chilean worker. . In 2020, the average tax burden from income and payroll taxes for families in OECD countries was 24.4 percent, 10.2 percentage points lower than for single taxpayers without children. In general, countries with higher tax wedges provide greater tax relief for families with children. . Between 2019 and 2020, the OECD average tax burden decreased by 0.39 percentage points and COVID-19 measures accounted for roughly one-fifth of that. - In 2020 an Italian worker making E38,396 (US $56,839) faced a marginal tax wedge as high as 117 percent on a 1 percent increase in earnings. Such marginal tax wedges might deter workers from pursuing additional income and working extra hours. . Accounting for VAT and sales tax, the average tax burden on labor in 2020 was 40.1 percent, 5.5 percentage points higher than when only income and payroll taxes are considered. 202.464.6200 taxfoundation.org