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Switzerland is among the OECD countries with the lowest tax and social security burden on labour income. The position of Switzerland’s average tax wedge (income taxes plus employee and employer social security contributions minus cash transfers as a percentage of total labour costs) compared with the OECD average remained constant between 2000 and 2011. In 2011, the tax wedge was between 13 and 17 percentage points lower than the OECD average for every household in the Taxing Wages Report. Average one-earner couples with 2 children took home 92% of what they cost to their employers (“total labour costs”). Only New Zealand, Chile and Ireland taxed these families at a lower rate.
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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 declined moderately over the 11 years for all family types. Households with children benefited the most.
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download the above graph and data for all OECD countries (xls/729kB)
The tax wedge marginally increased from 2010 to 2011 for all family types in the Taxing Wages Report. It increased the most for single parents earning 67% of the average wage; their tax wedge rose by 0.6 percentage points to 2.8% of total labour costs. Single workers with average earnings saw their tax wedge increase by 0.3 percentage points to 21.0% of total labour costs. The tax wedge increased the least for two-earner couples with 2 children where one spouse earns the average wage and the other spouse 67% of it; the change being 0.1 percentage point to 14.2% of total labour costs. For other family types, the tax wedge increased by 0.2 percentage points.
Employees and employers in Switzerland are required to make contributions to privately-managed pension funds. Employees also have to pay for a private health insurance and employers have to make family allowance contributions which do not qualify as “taxes”. These “non-tax compulsory payments (NTCPs)” represent a strong increase over and above the overall tax burden. E.g. , in 2011, the compulsory payment wedge for the average single worker was 39.7% compared with the corresponding tax wedge of 21.0%. More information on these NTCPs in Switzerland 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 Switzerland was CHF 77 414 (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 Switzerland: 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 Switzerland 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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