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The United States is among the OECD countries that levy a relatively low tax burden on labour income. For example, in 2011 single taxpayers at average earnings took home 70% of what they cost to their employer (“total labour costs”). The average tax wedge (income taxes plus employee and employer social security contributions minus cash transfers as a percentage of total labour costs) was below the OECD average for all family types. The tax wedge for single parents with low earnings and for average one-earner couples with 2 children was more than 7 percentage points below average.
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Tax Wedge in % of labour costs for different wage levels
and household types, 2000 and 2011
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The tax wedge decreased for all family types over the 11 years. The tax wedge decreased the most for single taxpayers with high earnings (-2.4 percentage points) and for the average one-earner married couples with 2 children (-2.5 percentage points).
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download the above graph and data for all OECD countries (xls/729kB)
From 2010 to 2011, the overall tax burden decreased for most households analysed in the Taxing Wages Report mainly due to a reduced employee social security rate. The tax burden decreased the most for single workers earning 167% of the average wage. Their tax wedge dropped by 1.3 percentage points to 34.4% of total labour costs. For single workers at the average wage, it decreased by 0.9 percentage points to 29.5% of total labour costs. The two-earner couples with 2 children where one spouse earns the average wage and the other 67% of it saw their tax wedge decline by 0.8 percentage points to 24.6% of total labour costs. Single workers earning 67% of the average wage experienced a drop in their tax wedge of 0.6 percentage points to 27.2% of labour costs. The tax burden decreased the least for single parents earning 67% of the average wage; their tax wedge declined by 0.2 percentage points to 8.2% of labour costs. On the other hand, it remained at 18.2% of total labour costs for average one-earner couples with 2 children.
The tax wedge in Taxing Wages is calculated on the basis of the average gross wage earnings of full-time employees in the private sector (including employees at management level). The corresponding 2011 annual average gross wage for the United States was USD 46 800 (Secretariat estimate).
Graphical Exposition of the 2011 Estimated Tax Burden
The graphs in this section show the estimated tax burden on labour income in 2011 for gross wage earnings between 50 per cent and 250 per cent of the average wage (AW). They cover four family types with the average and marginal tax wedge presented in a separate graph for each:
- single taxpayers without children,
- single parents with 2 children,
- one-earner married couples without children, and
- one-earner married couples with 2 children
There are two graphs for each family type – one showing the average tax wedge as a percentage of total labour costs (TLC) and the corresponding net personal average tax rate as a percentage of gross earnings; the other showing the marginal tax wedge and the net personal marginal tax rate. Each graph presents a breakdown of the tax wedge into five separate components as a percentage of TLC:
- central income taxes,
- local income taxes,
- employee social security contributions,
- employer social security contributions, and
- family benefits.
Download the AVERAGE graphical expositon file, 2011 (XLS/609kB)
Download the MARGINAL graphical expositon file, 2011 (XLS/644kB)
Observations from the OECD concerning the data for 2011 can be found within the publication.
Special Feature: Wage Income Tax Reforms and Changes in Tax Burdens in the United States: 2000-2009
The Special Feature of the 2010 edition of the Taxing Wages report calculates the changes over time in the tax burden on wage income ranging from 50% to 250% of the average wage by comparing the tax burden in 2009 with the tax burden in 2000 and calculates the respective contributions of changes in income taxes, employee social security contributions, employer social security contributions and cash benefits. The analysis focuses on changes in the average and marginal tax wedge as well as changes in the net personal average and marginal tax rate.
Change in the average tax wedge (2000 - 2009) (xls/1.5Mb)
Change in the marginal tax wedge (2000 - 2009) (xls/1.2Mb)
Change in net personal average tax rate (2000 - 2009) (xls/1.5Mb)
Change in net personal marginal tax rate (2000 - 2009) (xls/1.2Mb)
A guide for interpreting the attached special feature country charts (doc/350kB)
More Information
A detailed description of the tax system in the United States and the associated calculations for the tax wedge are included in Taxing Wages 2010.
Comparative analyses comparing country data can be found on our free online database OECD.StatExtracts, under: Public Sector, Taxation and Market Regulation > Taxation > Taxing wages.
Access to the complete dataset shown in the Taxing Wages report, including detailed country information, is through subscription. For details on how to subscribe please visit our "Getting Online Access" page at the OECD Library website.
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