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The OECD’s Taxing Wages (TW) Report1 provides details of taxes paid on wages in the 34 OECD member countries. In particular, it covers the personal income tax and social security contributions paid by employees and their employers, as well as cash benefits received by families.
Over the last two decades almost all OECD countries have made major structural changes to their tax systems. In the case of the personal and corporate income tax regimes reforms have generally been rate reducing and base broadening, following the lead given by the United Kingdom in 1984 and the United States in 1986. In some countries, including Australia and New Zealand, reforms have been profound and sometimes implemented over a
The tax burden on labour and its evolution over time are issues that feature prominently in the political debate. Averaged across the OECD, personal income taxes, social security contributions and payroll taxes together account for more than 51% of total government revenues in 2008 (OECD, 2010).
High unemployment rates, in the wake of the financial and economic crisis, have governments scrambling to create jobs. A new OECD report suggests that well-targeted tax reforms can encourage employers to hire more people and the jobless to look for employment.
How do taxes affect the level of employment? What reforms can reduce unemployment and increase labour force participation? These questions are answered in OECD Tax Policy Study No. 21: Taxation and Employment.
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The report provides both a broad overview of the effects of taxation on employment as well as a detailed analysis of selected issues.
Many governments are facing historic high levels of deficit and debt. Public spending has risen and they are taking in less money as tax revenues fall. Governments are attempting to consolidate their budgets, looking for the appropriate balance between expenditure cuts and revenue increases.
Tax revenues fell in cash terms during 2009 in most OECD countries, driven downward by declining economic activity and tax cuts aimed at cushioning the effects of the recession that followed the financial crisis.
In the wake of the recent financial and economic crisis, how OECD countries can face the challenge of restoring public finances without jeopardising economic growth?
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Given the current high levels of budget deficits and government debt, Governments recognize that they need to consolidate their budgets. Taxes can give rise to a multitude of disincentives to work, invest and innovate, with adverse effects on economic growth and welfare.