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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
©2021 Tax Foundation
Creative Commons CC-BY-NC 4.0
Editor, Rachel Shuster
Designer, Dan Carvajal
1325 G Street, NW, Suite 950
Washington, DC 20005
A Comparison of the
Tax Burden on Labor in the OECD
· 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
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
In 2020 an Italian worker making €38,396 (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 whe