Overview

This chapter presents the main results of the analysis of the taxation of labour income across OECD countries in 2021. Most emphasis is given to the tax wedge – a measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee – which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. The calculations also focus on the net personal average tax rate. This is the term used when the personal income tax and employee social security contributions net of cash benefits are expressed as a percentage of gross wage earnings. The analysis focuses on the single worker, with no children, at average earnings and makes a comparison with the one-earner married couple with two children, at the same income level. A complementary analysis focuses on the two-earner couple with two children, where one spouse earns the average wage and the other 67% of it.