Between 2000 and 2011, Norway’s tax and social security burden on labour income was higher than the OECD average. Over the 11 years, the difference widened for most household types. In 2011, the average tax wedge (income taxes plus employee and employer social security contributions minus cash transfers as a percentage of total labour costs) was more than 5 percentage points above the OECD average for average one-earner couples with 2 children and for single parents with low income. For the latter, the tax wedge was 2 percentage points below the OECD average in 2000. The difference compared with the OECD average was the smallest for single taxpayers earning the average wage; their tax wedge was 2 percentage points higher than the OECD average in 2011.

 

Tax Wedge in % of labour costs for different wage levels and household types, 2000 and 2011

Between 2000 and 2011, the tax wedge increased by 5.1 percentage points for single parents with low earnings and by 2.6 percentage points for average one-earner couples with children. The tax wedge declined for all single taxpayers without children.

download the above graph and data for all OECD countries (xls/729kB)

 

Between 2010 and 2011, the tax burden on labour income moderately increased for all family types in the Taxing Wages Report . The tax burden increased the most for single parents earning 67% of average wage; their tax wedge rose by 0.7 percentage points to 21.4% of total labour costs. For average one-earner couples with 2 children, the tax wedge increased by 0.4 percentage points to 31.0% of total labour costs. An increase of 0.3 percentage points was observered for single worker earning the average wage and two-earner couples with 2 children where one spouse earns the average wage and the other spouse 67% of it; their tax wedge rose to 37.5% and 33.6% of total labour costs, respectively. The tax wedge increased the least for single taxpayers with low and high earnings.

 

Employers in Norway are required to make contributions to a (privately-managed) occupational pension scheme. These “non-tax compulsory payments (NTCPs)” represent an increase over and above the overall tax burden. E.g. , in 2011, the compulsory payment wedge for the average single worker was 38.4% compared with the corresponding tax wedge of 37.5%. More information on these NTCPs in Norway and other OECD countries is included in the OECD Tax Database at www.oecd.org/ctp/taxdatabase.

 

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 Norway was NOK 487 324 (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 Norway: 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)

 

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More Information

A detailed description of the tax system in Norway 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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