EIRP Proceedings, Vol 13 (2018)
Comparative Analysis of Personal Income Taxation
Rodica Pripoaie1
Abstract: This paper presents a comparative analysis of personal income taxation in different countries. This is an important component of fiscal policy and directly influences the budget revenues. Over time there have been several taxation systems, and today they differ from state to state. The statistics contain detailed information on income tax on individuals and their income, including gender, age, income and source of income. This work shows how the income distribution of individual taxpayers has changed over time, as well as the differences and similarities of personal income taxation in the different countries.
Keywords: fiscal policy; comparative analysis of fiscal policy; personal income; taxation
JEL Classification: C15; E62; E63; H20; H24
1. Introduction
All people pay taxes, regardless of nationality, sex or religion, so taxation is part of our lives, of all. Employees pay from wage in addition to personal income tax and a series of social contributions that, although not of a fiscal nature, are payment obligations that affect net income and which have the highest percentage of taxes and fees paid.
Worldwide, there is a trend towards fiscal harmonization, but taxes differ greatly from one country to another, and even within the EU Member States. Thus, the rate of taxation differs greatly depending on the degree of development of the country concerned, in the sense that it is lower in developing countries and higher in developed ones.
The income tax on individuals has a very wide scope and differs greatly in terms of tax rates that can be proportional or progressive. This is a direct tax, paid and directly supported by the individual, which makes it the basic element of any fiscal system, especially if it is also considered that it contributes, on average, by about 25-30% to the formation of tax revenues of a country.
The European Union has no role to establish taxes. The rate of tax is decided by the governments of the Member States. The EU’s role is to ensure that national taxes are in accord with EU policies and do not discriminate individuals.
2.1. The Organization for Economic Co-operation and Development (OECD) Taxing Wages
The tax wedge is defined by http://www.oecd.org/tax/tax-policy/tax-database.htm as “the combined central and sub-central government income tax plus employee and employer social security contribution taxes, as a percentage of labor costs defined as gross wage earnings plus employer social security contributions. The tax wedge includes cash transfers.”
The all-in tax rate is calculated by http://www.oecd.org/tax/tax-policy/tax-database.htm as: “the combined central and sub-central government income tax plus employee social security contribution, as a percentage of gross wage earnings.”
Personal average tax rate (or “tax burden”) is the term defined by http://www.oecd.org/tax/tax-policy/tax-database.htm used when personal income tax and employees’ social security contribution are expressed as a percentage of gross wage earnings.
2.2. Evolution of Personal Income Tax Rates and Thresholds in OECD Countries during the Period 2000-2017
Taxing Wages 2018 shows that the “net personal average tax rate” – income tax and social security contributions paid by employees, minus any family benefits received, as a share of gross wages – was 25.5% across the OECD. This OECD-wide average rate, calculated for a single person with no children earning an average wage, has remained stable in recent years, but it covers country averages that range from below 15% in Chile, Korea and Mexico to over 35% in Belgium, Denmark and Germany. (http://www.oecd.org/newsroom/workers-in-oecd-countries-pay-one-quarter-of-wages-in-taxes.htm)
2.3. Central Government Personal Income Tax Rates and Thresholds
The table below shows the rates of personal income tax and the taxable income to which these legal rates apply. Also, table presents basic/standard tax allowances, tax credits and tax rates.
The informations are valid for a person without dependent persons.
Tapered means that the tax exemption is reduced as income increases.
Table 1
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I1
http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I1#
Year |
2017 |
||
Country |
|||
0.00 |
25.00 |
35.00 |
|
15.00 |
20.50 |
26.00 |
|
0.00 |
14.00 |
30.00 |
|
0.00 |
.. |
.. |
|
22.00 |
29.00 |
37.00 |
|
23.00 |
27.00 |
38.00 |
|
5.00 |
10.00 |
20.00 |
|
1.92 |
6.40 |
10.88 |
|
0.00 |
0.77 |
0.88 |
|
15.00 |
20.00 |
27.00 |
|
20.00 |
40.00 |
45.00 |
|
10.00 |
15.00 |
25.00 |
|
Source: Selection from the previous table
Evolution graphically of marginal rates of central government personal incomes tax can be presents as in the below figures:
2.4. Sub-Central Personal Income Tax Rates-Non-Progressive Systems
The following table shows which are the representative sub-central personal income tax rates, tax allowances and credits and these are applies to the wage income of a single person no dependants for a representative city or an average of sub-central rates. Also, the minimum and maximum sub-central rates across states and municipalities, and the amounts of tax allowances are expressed in national currencies.
Table 2
Year |
2017 |
||||
Sub-central tax rates |
|||||
Country |
|
|
|
|
|
.. |
.. |
24.93 |
22.50 |
27.80 |
|
6,630.00 |
.. |
19.91 |
17.00 |
22.50 |
|
.. |
.. |
14.44 |
12.44 |
14.52 |
|
.. |
.. |
3.33 |
1.23 |
3.83 |
|
330,000.00 |
.. |
10.00 |
.. |
.. |
|
.. |
.. |
10.00 |
5.00 |
15.00 |
|
.. |
.. |
14.45 |
0.00 |
14.45 |
|
.. |
.. |
32.12 |
29.19 |
35.15 |
|
4,000.00 |
30.62 |
4.25 |
.. |
.. |
|
600.00 |
.. |
2.40 |
.. |
.. |
|
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I2
Evolution graphically of representative sub-central rate can be presents as in the following figures:
2.5. Sub-central Personal Income Tax Rates-Progressive Systems
The following table is based on the representative case and presents information about sub-central income tax systems with progressive rate structures. These rate taxes are available to wage income of a single person without dependants and the rates are expressed as a percentage of taxable income.
Table 3
Central government tax rates and thresholds |
||||||
Country |
|
|
|
|
|
|
25.0 |
11,070.0 |
30.0 |
12,720.0 |
40.0 |
21,190.0 |
|
5.1 |
42,201.0 |
9.2 |
84,404.0 |
11.2 |
150,000.0 |
|
9.5 |
12,450.0 |
11.2 |
17,707.0 |
13.3 |
33,007.0 |
|
0.0 |
6,700.0 |
2.0 |
11,400.0 |
3.0 |
16,100.0 |
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I3
Evolution graphically of representative sub-central rate can be presents as in the following figures:
2.6. Marginal Personal Income Tax and Social Security Contribution Rates on Gross Labor Income
The following table presents which is the marginal personal income tax and social security contribution rates for a single person without dependent, at various multiples (67%, 100%, 133% and 167%). The marginal rates are expressed as a percentage of gross wage earnings, with the exception of the Total tax wedge which is expressed as a percentage of gross labor costs.
Table 4
Year |
2017 |
|||||||
Unit |
Percentage |
|||||||
67 |
100 |
133 |
167 |
|||||
Marginal tax rates and wedges |
|
|
|
|
||||
Australia |
39.6 |
38.2 |
42.4 |
42.4 |
||||
Employer SSC |
6.0 |
6.0 |
6.0 |
6.0 |
||||
36.0 |
34.5 |
39.0 |
39.0 |
|||||
Employee SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
36.0 |
34.5 |
39.0 |
39.0 |
||||
Central government |
36.0 |
34.5 |
39.0 |
39.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Austria |
55.8 |
59.7 |
59.7 |
41.0 |
||||
Employer SSC |
28.5 |
28.5 |
28.5 |
7.1 |
||||
43.3 |
48.2 |
48.2 |
36.9 |
|||||
Employee SSC |
18.0 |
18.0 |
18.0 |
0.0 |
||||
Combined central and sub-central government |
25.3 |
30.2 |
30.2 |
36.9 |
||||
Central government |
25.3 |
30.2 |
30.2 |
36.9 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Belgium |
65.5 |
66.4 |
68.5 |
67.6 |
||||
Employer SSC |
32.2 |
32.2 |
26.2 |
26.2 |
||||
54.3 |
55.6 |
60.2 |
59.1 |
|||||
Employee SSC |
14.2 |
14.2 |
14.2 |
13.1 |
||||
Combined central and sub-central government |
40.2 |
41.4 |
46.0 |
46.0 |
||||
Central government |
28.5 |
29.4 |
32.6 |
32.6 |
||||
Sub-central government |
11.7 |
12.1 |
13.4 |
13.4 |
||||
Canada |
33.3 |
39.5 |
32.8 |
36.9 |
||||
Employer SSC |
12.0 |
9.7 |
4.7 |
4.7 |
||||
25.3 |
33.6 |
29.7 |
33.9 |
|||||
Employee SSC |
6.6 |
5.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
18.7 |
28.7 |
29.7 |
33.9 |
||||
Central government |
14.0 |
19.8 |
20.5 |
20.5 |
||||
Sub-central government |
4.7 |
8.9 |
9.2 |
13.4 |
||||
Chile |
7.0 |
7.0 |
10.3 |
10.3 |
||||
Employer SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
7.0 |
7.0 |
10.3 |
10.3 |
|||||
Employee SSC |
7.0 |
7.0 |
7.0 |
7.0 |
||||
Combined central and sub-central government |
0.0 |
0.0 |
3.3 |
3.3 |
||||
Central government |
0.0 |
0.0 |
3.3 |
3.3 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Czech Republic |
48.6 |
48.6 |
48.6 |
48.6 |
||||
Employer SSC |
34.0 |
34.0 |
34.0 |
34.0 |
||||
31.1 |
31.1 |
31.1 |
31.1 |
|||||
Employee SSC |
11.0 |
11.0 |
11.0 |
11.0 |
||||
Combined central and sub-central government |
20.1 |
20.1 |
20.1 |
20.1 |
||||
Central government |
20.1 |
20.1 |
20.1 |
20.1 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Denmark |
39.7 |
42.0 |
55.8 |
55.8 |
||||
Employer SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
39.7 |
42.0 |
55.8 |
55.8 |
|||||
Employee SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
39.7 |
42.0 |
55.8 |
55.8 |
||||
Central government |
18.9 |
19.1 |
32.9 |
32.9 |
||||
Sub-central government |
20.7 |
22.9 |
22.9 |
22.9 |
||||
Estonia |
41.2 |
41.2 |
41.2 |
41.2 |
||||
Employer SSC |
33.8 |
33.8 |
33.8 |
33.8 |
||||
21.3 |
21.3 |
21.3 |
21.3 |
|||||
Employee SSC |
1.6 |
1.6 |
1.6 |
1.6 |
||||
Combined central and sub-central government |
19.7 |
19.7 |
19.7 |
19.7 |
||||
Central government |
19.7 |
19.7 |
19.7 |
19.7 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Finland |
54.3 |
55.6 |
58.5 |
58.5 |
||||
Employer SSC |
22.3 |
22.3 |
22.3 |
22.3 |
||||
44.1 |
45.7 |
49.3 |
49.3 |
|||||
Employee SSC |
9.3 |
9.3 |
9.3 |
9.3 |
||||
Combined central and sub-central government |
34.8 |
36.3 |
40.0 |
40.0 |
||||
Central government |
0.0 |
17.4 |
21.0 |
21.0 |
||||
Sub-central government |
34.8 |
18.9 |
18.9 |
18.9 |
||||
France |
69.3 |
58.5 |
59.4 |
59.9 |
||||
Employer SSC |
82.6 |
35.1 |
41.2 |
43.0 |
||||
43.9 |
44.0 |
42.7 |
42.7 |
|||||
Employee SSC |
14.4 |
14.4 |
12.6 |
12.6 |
||||
Combined central and sub-central government |
29.5 |
29.6 |
30.1 |
30.1 |
||||
Central government |
29.5 |
29.6 |
30.1 |
30.1 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
55.8 |
60.4 |
57.0 |
44.3 |
|||||
Employer SSC |
19.4 |
19.4 |
10.9 |
0.0 |
||||
47.2 |
52.6 |
52.3 |
44.3 |
|||||
Employee SSC |
20.8 |
20.8 |
10.9 |
0.0 |
||||
Combined central and sub-central government |
26.4 |
31.9 |
41.5 |
44.3 |
||||
Central government |
26.4 |
31.9 |
41.5 |
44.3 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Greece |
47.6 |
49.1 |
56.3 |
56.3 |
||||
Employer SSC |
25.1 |
25.1 |
25.1 |
25.1 |
||||
34.5 |
36.3 |
45.4 |
45.4 |
|||||
Employee SSC |
16.0 |
16.0 |
16.0 |
16.0 |
||||
Combined central and sub-central government |
18.5 |
20.3 |
29.4 |
29.4 |
||||
Central government |
18.5 |
20.3 |
29.4 |
29.4 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Hungary |
46.2 |
46.2 |
46.2 |
46.2 |
||||
Employer SSC |
23.5 |
23.5 |
23.5 |
23.5 |
||||
33.5 |
33.5 |
33.5 |
33.5 |
|||||
Employee SSC |
18.5 |
18.5 |
18.5 |
18.5 |
||||
Combined central and sub-central government |
15.0 |
15.0 |
15.0 |
15.0 |
||||
Central government |
15.0 |
15.0 |
15.0 |
15.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Iceland |
39.6 |
39.6 |
48.0 |
48.0 |
||||
Employer SSC |
6.9 |
6.9 |
6.9 |
6.9 |
||||
35.5 |
35.5 |
44.4 |
44.4 |
|||||
Employee SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
35.5 |
35.5 |
44.4 |
44.4 |
||||
Central government |
21.6 |
21.6 |
30.5 |
30.5 |
||||
Sub-central government |
13.9 |
13.9 |
13.9 |
13.9 |
||||
Ireland |
35.9 |
54.0 |
54.0 |
54.0 |
||||
Employer SSC |
10.8 |
10.8 |
10.8 |
10.8 |
||||
29.0 |
49.0 |
49.0 |
49.0 |
|||||
Employee SSC |
4.0 |
4.0 |
4.0 |
4.0 |
||||
Combined central and sub-central government |
25.0 |
45.0 |
45.0 |
45.0 |
||||
Central government |
25.0 |
45.0 |
45.0 |
45.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
31.2 |
36.7 |
47.0 |
50.7 |
|||||
Employer SSC |
7.5 |
7.5 |
7.5 |
7.5 |
||||
26.0 |
32.0 |
43.0 |
47.0 |
|||||
Employee SSC |
12.0 |
12.0 |
12.0 |
12.0 |
||||
Combined central and sub-central government |
14.0 |
20.0 |
31.0 |
35.0 |
||||
Central government |
14.0 |
20.0 |
31.0 |
35.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Italy |
54.7 |
54.7 |
62.5 |
62.9 |
||||
Employer SSC |
31.6 |
31.6 |
31.6 |
31.6 |
||||
40.4 |
40.4 |
50.6 |
51.2 |
|||||
Employee SSC |
9.5 |
9.5 |
9.5 |
10.5 |
||||
Combined central and sub-central government |
30.9 |
30.9 |
41.1 |
40.7 |
||||
Central government |
28.5 |
28.5 |
37.7 |
37.3 |
||||
Sub-central government |
2.4 |
2.4 |
3.5 |
3.4 |
||||
Japan |
33.0 |
37.2 |
45.7 |
35.0 |
||||
Employer SSC |
15.2 |
15.2 |
15.2 |
6.1 |
||||
22.8 |
27.7 |
37.4 |
31.1 |
|||||
Employee SSC |
14.4 |
14.4 |
14.4 |
5.3 |
||||
Combined central and sub-central government |
8.4 |
13.3 |
23.0 |
25.8 |
||||
Central government |
2.8 |
6.7 |
15.4 |
17.3 |
||||
Sub-central government |
5.6 |
6.6 |
7.6 |
8.5 |
||||
Korea |
28.5 |
30.0 |
23.4 |
31.9 |
||||
Employer SSC |
10.4 |
10.4 |
5.9 |
5.9 |
||||
21.0 |
22.7 |
18.9 |
28.0 |
|||||
Employee SSC |
8.4 |
8.4 |
3.9 |
3.9 |
||||
Combined central and sub-central government |
12.6 |
14.3 |
15.0 |
24.0 |
||||
Central government |
11.5 |
13.0 |
13.7 |
21.9 |
||||
Sub-central government |
1.1 |
1.3 |
1.4 |
2.2 |
||||
Luxembourg |
44.0 |
55.5 |
55.5 |
54.2 |
||||
Employer SSC |
12.2 |
12.2 |
12.2 |
12.2 |
||||
37.2 |
50.1 |
50.1 |
48.6 |
|||||
Employee SSC |
12.5 |
12.5 |
12.5 |
12.5 |
||||
Combined central and sub-central government |
24.7 |
37.7 |
37.7 |
36.2 |
||||
Central government |
24.7 |
37.7 |
37.7 |
36.2 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Mexico |
17.5 |
25.2 |
28.4 |
28.4 |
||||
Employer SSC |
6.5 |
7.6 |
7.6 |
7.6 |
||||
12.1 |
19.5 |
22.9 |
22.9 |
|||||
Employee SSC |
1.3 |
1.7 |
1.7 |
1.7 |
||||
Combined central and sub-central government |
10.8 |
17.8 |
21.3 |
21.3 |
||||
Central government |
10.8 |
17.8 |
21.3 |
21.3 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Netherlands |
51.6 |
51.6 |
46.2 |
52.3 |
||||
Employer SSC |
11.1 |
11.1 |
0.0 |
0.0 |
||||
46.2 |
46.2 |
46.2 |
52.3 |
|||||
Employee SSC |
26.0 |
0.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
20.2 |
46.2 |
46.2 |
52.3 |
||||
Central government |
20.2 |
46.2 |
46.2 |
52.3 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
New Zealand |
17.5 |
30.0 |
33.0 |
33.0 |
||||
Employer SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
17.5 |
30.0 |
33.0 |
33.0 |
|||||
Employee SSC |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
17.5 |
30.0 |
33.0 |
33.0 |
||||
Central government |
17.5 |
30.0 |
33.0 |
33.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Norway |
42.1 |
42.1 |
50.2 |
52.8 |
||||
Employer SSC |
13.0 |
13.0 |
13.0 |
13.0 |
||||
34.6 |
34.6 |
43.7 |
46.7 |
|||||
Employee SSC |
8.2 |
8.2 |
8.2 |
8.2 |
||||
Combined central and sub-central government |
26.4 |
26.4 |
35.5 |
38.5 |
||||
Central government |
12.0 |
12.0 |
21.1 |
24.1 |
||||
Sub-central government |
14.5 |
14.5 |
14.5 |
14.5 |
||||
Poland |
37.0 |
37.0 |
37.0 |
37.0 |
||||
Employer SSC |
16.4 |
16.4 |
16.4 |
16.4 |
||||
26.7 |
26.7 |
26.7 |
26.7 |
|||||
Employee SSC |
17.8 |
17.8 |
17.8 |
17.8 |
||||
Combined central and sub-central government |
8.8 |
8.8 |
8.8 |
8.8 |
||||
Central government |
8.8 |
8.8 |
8.8 |
8.8 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Portugal |
51.1 |
51.1 |
51.1 |
58.7 |
||||
Employer SSC |
23.8 |
23.8 |
23.8 |
23.8 |
||||
39.5 |
39.5 |
39.5 |
48.9 |
|||||
Employee SSC |
11.0 |
11.0 |
11.0 |
11.0 |
||||
Combined central and sub-central government |
28.5 |
28.5 |
28.5 |
37.9 |
||||
Central government |
28.5 |
28.5 |
28.5 |
37.9 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Slovak Republic |
46.4 |
46.4 |
46.4 |
46.4 |
||||
Employer SSC |
31.0 |
31.0 |
31.0 |
31.0 |
||||
29.9 |
29.9 |
29.9 |
29.9 |
|||||
Employee SSC |
13.4 |
13.4 |
13.4 |
13.4 |
||||
Combined central and sub-central government |
16.5 |
16.5 |
16.5 |
16.5 |
||||
Central government |
16.5 |
16.5 |
16.5 |
16.5 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Slovenia |
43.6 |
51.0 |
51.0 |
55.7 |
||||
Employer SSC |
16.1 |
16.1 |
16.1 |
16.1 |
||||
34.6 |
43.1 |
43.1 |
48.6 |
|||||
Employee SSC |
22.1 |
22.1 |
22.1 |
22.1 |
||||
Combined central and sub-central government |
12.5 |
21.0 |
21.0 |
26.5 |
||||
Central government |
12.5 |
21.0 |
21.0 |
26.5 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
Spain |
44.6 |
48.3 |
48.3 |
54.1 |
||||
Employer SSC |
29.9 |
29.9 |
29.9 |
29.9 |
||||
28.1 |
32.9 |
32.9 |
40.4 |
|||||
Employee SSC |
6.4 |
6.4 |
6.4 |
6.4 |
||||
Combined central and sub-central government |
21.7 |
26.5 |
26.5 |
34.1 |
||||
Central government |
11.2 |
14.0 |
14.0 |
17.3 |
||||
Sub-central government |
10.5 |
12.5 |
12.5 |
16.8 |
||||
Sweden |
45.6 |
48.3 |
63.6 |
69.7 |
||||
Employer SSC |
31.4 |
31.4 |
31.4 |
31.4 |
||||
28.6 |
32.1 |
52.1 |
60.1 |
|||||
Employee SSC |
7.0 |
7.0 |
0.0 |
0.0 |
||||
Combined central and sub-central government |
21.6 |
25.1 |
52.1 |
60.1 |
||||
Central government |
-13.8 |
-7.0 |
20.0 |
28.0 |
||||
Sub-central government |
35.3 |
32.1 |
32.1 |
32.1 |
||||
Switzerland |
26.3 |
27.8 |
32.3 |
36.6 |
||||
Employer SSC |
6.2 |
6.2 |
6.2 |
6.2 |
||||
21.7 |
23.3 |
28.1 |
32.6 |
|||||
Employee SSC |
6.2 |
6.2 |
6.2 |
6.2 |
||||
Combined central and sub-central government |
15.4 |
17.0 |
21.9 |
26.4 |
||||
Central government |
2.3 |
2.5 |
5.5 |
7.6 |
||||
Sub-central government |
13.2 |
14.6 |
16.4 |
18.8 |
||||
42.8 |
47.8 |
47.8 |
47.8 |
|||||
Employer SSC |
17.5 |
17.5 |
17.5 |
17.5 |
||||
32.8 |
38.7 |
38.7 |
38.7 |
|||||
Employee SSC |
15.0 |
15.0 |
15.0 |
15.0 |
||||
Combined central and sub-central government |
17.8 |
23.7 |
23.7 |
23.7 |
||||
Central government |
17.8 |
23.7 |
23.7 |
23.7 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
United Kingdom |
40.2 |
40.2 |
49.0 |
49.0 |
||||
Employer SSC |
13.8 |
13.8 |
13.8 |
13.8 |
||||
32.0 |
32.0 |
42.0 |
42.0 |
|||||
Employee SSC |
12.0 |
12.0 |
2.0 |
2.0 |
||||
Combined central and sub-central government |
20.0 |
20.0 |
40.0 |
40.0 |
||||
Central government |
20.0 |
20.0 |
40.0 |
40.0 |
||||
Sub-central government |
0.0 |
0.0 |
0.0 |
0.0 |
||||
United States |
34.3 |
43.6 |
43.6 |
43.6 |
||||
Employer SSC |
7.7 |
7.7 |
7.7 |
7.7 |
||||
29.3 |
39.3 |
39.3 |
39.3 |
|||||
Employee SSC |
7.7 |
7.7 |
7.7 |
7.7 |
||||
Combined central and sub-central government |
21.7 |
31.7 |
31.7 |
31.7 |
||||
Central government |
15.0 |
25.0 |
25.0 |
25.0 |
||||
Sub-central government |
6.7 |
6.7 |
6.7 |
6.7 |
||||
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I4
2.7. Average Personal Income Tax and Social Security Contribution Rates on Gross Labor Income
The below table shows which is the average personal income tax and social security contribution rates for a single person without dependent, at various multiples (67%, 100%, 133% and 167%) of the AW/APW.
The average wage (AW) is based on a single person at 100% of average earnings without children.
Table 5
Year |
2017 |
||||||
Unit |
Percentage |
||||||
All in average income tax rates at average wage |
|||||||
Single person |
One-earner married couple |
Single person |
One-earner married couple |
||||
No child |
Two children |
No child |
Two children |
Two children |
No child |
Two children |
|
Country |
|
|
|
|
|
|
|
Australia |
24.4 |
24.4 |
24.4 |
24.4 |
16.1 |
24.4 |
16.1 |
Austria |
32.4 |
30.2 |
32.4 |
30.2 |
19.1 |
32.4 |
19.1 |
Belgium |
40.5 |
37.0 |
31.4 |
28.9 |
28.8 |
31.4 |
20.7 |
Canada |
22.8 |
18.0 |
18.6 |
18.0 |
1.8 |
18.6 |
1.2 |
Chile |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
Czech Republic |
24.1 |
11.8 |
17.1 |
4.8 |
7.6 |
17.1 |
0.7 |
Denmark |
36.1 |
34.8 |
32.0 |
32.0 |
16.5 |
31.5 |
25.3 |
Estonia |
18.4 |
15.9 |
15.4 |
13.0 |
4.7 |
15.4 |
4.8 |
Finland |
30.2 |
29.9 |
30.2 |
30.1 |
21.8 |
30.2 |
24.7 |
France |
29.2 |
22.2 |
22.5 |
22.2 |
11.4 |
22.5 |
18.2 |
39.9 |
28.1 |
31.8 |
21.7 |
28.1 |
31.8 |
21.7 |
|
Greece |
26.0 |
25.5 |
26.9 |
26.5 |
22.4 |
26.9 |
23.7 |
Hungary |
33.5 |
23.4 |
33.5 |
23.4 |
13.5 |
33.5 |
14.5 |
Iceland |
28.7 |
28.7 |
21.5 |
21.5 |
24.8 |
21.5 |
18.6 |
Ireland |
19.4 |
13.4 |
13.4 |
10.4 |
1.3 |
13.4 |
1.2 |
17.7 |
11.6 |
17.7 |
17.7 |
7.5 |
17.7 |
15.0 |
|
Italy |
31.2 |
26.6 |
28.9 |
24.3 |
21.5 |
28.9 |
19.3 |
Japan |
22.3 |
22.3 |
20.9 |
20.9 |
17.7 |
20.9 |
16.3 |
Korea |
14.5 |
12.4 |
14.0 |
12.2 |
12.4 |
14.0 |
12.2 |
Luxembourg |
29.1 |
28.3 |
18.0 |
18.0 |
15.3 |
18.0 |
5.0 |
Mexico |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
Netherlands |
30.4 |
24.9 |
28.6 |
28.6 |
14.9 |
28.6 |
24.6 |
New Zealand |
18.1 |
18.1 |
18.1 |
18.1 |
6.4 |
18.1 |
6.4 |
Norway |
27.6 |
25.5 |
26.6 |
26.6 |
19.4 |
26.6 |
22.5 |
Poland |
25.1 |
19.5 |
23.9 |
19.5 |
7.4 |
23.9 |
-4.8 |
Portugal |
27.5 |
20.8 |
22.2 |
15.5 |
15.9 |
22.2 |
11.9 |
Slovak Republic |
23.5 |
19.0 |
17.2 |
12.7 |
14.1 |
17.2 |
7.8 |
Slovenia |
33.7 |
27.5 |
30.3 |
25.4 |
17.1 |
30.3 |
12.3 |
Spain |
21.1 |
10.6 |
17.5 |
13.9 |
10.6 |
17.5 |
13.9 |
Sweden |
25.0 |
25.0 |
25.0 |
25.0 |
18.8 |
25.0 |
18.8 |
Switzerland |
16.9 |
10.8 |
13.6 |
10.4 |
3.9 |
13.6 |
3.5 |
27.9 |
26.7 |
27.1 |
25.9 |
26.7 |
27.1 |
25.9 |
|
United Kingdom |
23.4 |
23.4 |
22.8 |
22.8 |
18.7 |
22.8 |
18.1 |
United States |
26.0 |
17.1 |
21.0 |
14.2 |
17.1 |
21.0 |
14.2 |
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I5
2.8. All-in Average Personal Income Tax Rates at Average Wage by Family Type
The below table presents which is the average personal income tax rates for single persons and one-earner married couples with and without children. The rates are calculated as a percentage of gross wage earnings.
Average wage represents the average annual gross wage earnings of adult, full-time workers in the industry.
Table 6
Year |
2017 |
|||||||||
Unit |
Percentage |
|||||||||
All in average income tax rates at average wage |
||||||||||
Single person |
One-earner married couple |
Single person |
One-earner married couple |
|||||||
No child |
Two children |
No child |
Two children |
Two children |
No child |
Two children |
||||
Country |
|
|
|
|
|
|
|
|||
Australia |
24.4 |
24.4 |
24.4 |
24.4 |
16.1 |
24.4 |
16.1 |
|||
Austria |
32.4 |
30.2 |
32.4 |
30.2 |
19.1 |
32.4 |
19.1 |
|||
Belgium |
40.5 |
37.0 |
31.4 |
28.9 |
28.8 |
31.4 |
20.7 |
|||
Canada |
22.8 |
18.0 |
18.6 |
18.0 |
1.8 |
18.6 |
1.2 |
|||
Chile |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
|||
Czech Republic |
24.1 |
11.8 |
17.1 |
4.8 |
7.6 |
17.1 |
0.7 |
|||
Denmark |
36.1 |
34.8 |
32.0 |
32.0 |
16.5 |
31.5 |
25.3 |
|||
Estonia |
18.4 |
15.9 |
15.4 |
13.0 |
4.7 |
15.4 |
4.8 |
|||
Finland |
30.2 |
29.9 |
30.2 |
30.1 |
21.8 |
30.2 |
24.7 |
|||
France |
29.2 |
22.2 |
22.5 |
22.2 |
11.4 |
22.5 |
18.2 |
|||
39.9 |
28.1 |
31.8 |
21.7 |
28.1 |
31.8 |
21.7 |
||||
Greece |
26.0 |
25.5 |
26.9 |
26.5 |
22.4 |
26.9 |
23.7 |
|||
Hungary |
33.5 |
23.4 |
33.5 |
23.4 |
13.5 |
33.5 |
14.5 |
|||
Iceland |
28.7 |
28.7 |
21.5 |
21.5 |
24.8 |
21.5 |
18.6 |
|||
Ireland |
19.4 |
13.4 |
13.4 |
10.4 |
1.3 |
13.4 |
1.2 |
|||
17.7 |
11.6 |
17.7 |
17.7 |
7.5 |
17.7 |
15.0 |
||||
Italy |
31.2 |
26.6 |
28.9 |
24.3 |
21.5 |
28.9 |
19.3 |
|||
Japan |
22.3 |
22.3 |
20.9 |
20.9 |
17.7 |
20.9 |
16.3 |
|||
Korea |
14.5 |
12.4 |
14.0 |
12.2 |
12.4 |
14.0 |
12.2 |
|||
Luxembourg |
29.1 |
28.3 |
18.0 |
18.0 |
15.3 |
18.0 |
5.0 |
|||
Mexico |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
11.2 |
|||
Netherlands |
30.4 |
24.9 |
28.6 |
28.6 |
14.9 |
28.6 |
24.6 |
|||
New Zealand |
18.1 |
18.1 |
18.1 |
18.1 |
6.4 |
18.1 |
6.4 |
|||
Norway |
27.6 |
25.5 |
26.6 |
26.6 |
19.4 |
26.6 |
22.5 |
|||
Poland |
25.1 |
19.5 |
23.9 |
19.5 |
7.4 |
23.9 |
-4.8 |
|||
Portugal |
27.5 |
20.8 |
22.2 |
15.5 |
15.9 |
22.2 |
11.9 |
|||
Slovak Republic |
23.5 |
19.0 |
17.2 |
12.7 |
14.1 |
17.2 |
7.8 |
|||
Slovenia |
33.7 |
27.5 |
30.3 |
25.4 |
17.1 |
30.3 |
12.3 |
|||
Spain |
21.1 |
10.6 |
17.5 |
13.9 |
10.6 |
17.5 |
13.9 |
|||
Sweden |
25.0 |
25.0 |
25.0 |
25.0 |
18.8 |
25.0 |
18.8 |
|||
Switzerland |
16.9 |
10.8 |
13.6 |
10.4 |
3.9 |
13.6 |
3.5 |
|||
27.9 |
26.7 |
27.1 |
25.9 |
26.7 |
27.1 |
25.9 |
||||
United Kingdom |
23.4 |
23.4 |
22.8 |
22.8 |
18.7 |
22.8 |
18.1 |
|||
United States |
26.0 |
17.1 |
21.0 |
14.2 |
17.1 |
21.0 |
14.2 |
|||
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I6
2.9. Top Statutory Personal Income Tax Rate and Top Marginal Tax Rates for Employees
The following table shows which is the top of statutory personal income tax rate and the top of marginal tax rates for personals employees.
Table 7
Year |
2017 |
|||||||
Income Tax |
Average wage in national currency units |
Average wage in US dollars based on Purchasing Power Parities |
||||||
Personal income tax & employee social security contributions (All-in rate) |
||||||||
Country |
|
|
|
|
|
|
||
49.0 |
49.0 |
49.0 |
2.2 |
55,098.7 |
||||
Austria |
48.0 |
48.0 |
48.0 |
7.9 |
57,580.8 |
|||
Belgium |
46.0 |
60.2 |
52.9 |
1.0 |
58,545.1 |
|||
Canada |
53.5 |
53.5 |
53.5 |
4.3 |
40,983.3 |
|||
Chile |
35.0 |
35.0 |
35.0 |
7.7 |
22,615.9 |
|||
Czech Republic |
20.1 |
31.1 |
15.0 |
0.3 |
27,535.8 |
|||
Denmark |
55.8 |
55.8 |
55.8 |
1.3 |
56,210.9 |
|||
Estonia |
19.7 |
21.3 |
20.0 |
0.1 |
26,795.9 |
|||
Finland |
49.0 |
58.3 |
51.4 |
1.9 |
49,012.6 |
|||
France |
53.9 |
55.1 |
54.5 |
14.6 |
48,339.2 |
|||
47.5 |
47.5 |
47.5 |
5.4 |
63,551.0 |
||||
Greece |
55.0 |
55.0 |
54.0 |
3.9 |
35,165.1 |
|||
Hungary |
15.0 |
33.5 |
15.0 |
0.0 |
26,012.2 |
|||
Iceland |
44.4 |
44.4 |
46.2 |
1.2 |
63,660.6 |
|||
Ireland |
48.0 |
52.0 |
48.0 |
1.9 |
45,093.0 |
|||
50.0 |
50.0 |
50.0 |
4.3 |
39,215.2 |
||||
Italy |
42.3 |
52.8 |
47.2 |
2.7 |
43,304.2 |
|||
Japan |
55.8 |
56.1 |
55.9 |
8.5 |
52,946.0 |
|||
Korea |
39.3 |
43.2 |
41.8 |
3.8 |
52,505.3 |
|||
Latvia |
10.9 |
21.4 |
23.0 |
0.1 |
10,904.8 |
21,755.0 |
||
Luxembourg |
41.4 |
42.8 |
41.4 |
2.8 |
65,716.3 |
|||
Mexico |
35.0 |
35.0 |
35.0 |
25.4 |
12,730.0 |
|||
Netherlands |
49.7 |
52.3 |
52.0 |
1.4 |
62,981.1 |
|||
New Zealand |
33.0 |
33.0 |
33.0 |
1.2 |
39,826.3 |
|||
Norway |
38.5 |
46.7 |
38.5 |
1.6 |
56,400.7 |
|||
Poland |
22.1 |
39.9 |
32.0 |
2.0 |
27,816.3 |
|||
Portugal |
50.0 |
61.0 |
56.2 |
15.6 |
30,888.5 |
|||
Slovak Republic |
21.7 |
35.1 |
25.0 |
3.5 |
23,484.0 |
|||
Slovenia |
39.0 |
61.1 |
50.0 |
5.0 |
31,417.2 |
|||
Spain |
43.5 |
43.5 |
43.5 |
2.4 |
40,451.4 |
|||
Sweden |
60.1 |
60.1 |
57.1 |
1.5 |
47,657.6 |
|||
Switzerland |
36.1 |
41.7 |
41.7 |
3.5 |
70,835.1 |
|||
Turkey |
30.5 |
45.5 |
35.8 |
3.2 |
29,263.0 |
|||
United Kingdom |
45.0 |
47.0 |
45.0 |
3.9 |
54,318.9 |
|||
United States |
46.3 |
48.6 |
46.3 |
8.0 |
52,988.0 |
|||
Source: http://stats.oecd.org/index.aspx?DataSetCode=TABLE_I7
Evolution graphically of top marginal tax rates for employees can be presents as in the following figures:
2.9. Conclusions
Taxation is part of our lives, of all because employees pay taxes from wage and social contributions, that affect net income. Worldwide, there is a trend towards fiscal harmonization, but yet taxes differ greatly from one country to another and these can be proportional or progressive.
On the basis of the statistical data provided by the OECD, it is found that increases in the average personal tax rate in 20 of the OECD’s 35 member countries in 2017 were mainly due to wage increases that reduced the impact of tax-free allowances and credits. Average tax rates fell in 13 countries and were unchanged in two (Chile and Hungary). The biggest increases in the tax rate were in the Czech Republic (0.5 percentage points).
References
Bronfenbrenner, Martin (2017). Income Distribution Theory. New York: Imprint Routledge, eBook Published 5 September.
Dragomir, G.; Trandafir, M. &Dragomir, C.M. (2011). Comparative Analysis on Romanian Taxation in the European Context, as a Prerequisite for Tax Harmonization. Acta Universitatis Danubius Oeconomica.
https://europa.eu/european-union/topics/taxation_ro.
https://europa.eu/european-union/topics/taxation_en.
http://www.oecd.org/tax/tax-policy/tax-database.htm.
https://www.oecd-ilibrary.org/taxation/taxing-wages-2011_tax_wages-2011-en.
1 Associate Professor, PhD, Dunărea de Jos University of Galati, Romania, Address: 47 Domnească Street, 800008, Galati, Romania, E-mail: 1rodica.pripoaie@ugal.ro.
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