The 'tax wedge,' ie the difference between labour costs to the employer and the net take-home pay of a single-earner employee is the biggest in Belgium (55.4%), Germany (51.8%), Hungary (50.5%) and France (50.1%), a fresh report by the Organisation for Economic Co-operation and Development (OECD) reveals. The calculation includes all cash benefits received from government welfare programmes.
Calculated for a single person on average earnings, the taxes are the lowest in New Zealand (20.5%), Mexico (18.2%) and Korea (17.3%). The US registered 29.1%, the UK 33.5% and Japan 27.7%.
The unweighted average 'tax wedge' for the 30 member countries of the OECD was calculated at 37.28% in 2005 (down from 37.42% in 2004).
For a married couple with a single earner and two children, the 'tax wedge' was found by the OECD to be the highest in Poland (42.1%), Sweden (42.4%) and Turkey (42.7%), and the lowest in Iceland (11%), Ireland (8.1%) and the United States (11.9%).
