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The Netherlands levies a relatively high tax and social security burden on labour income compared to other OECD countries, except on single parents with low earnings who saw their tax burden strongly decrease between 2000 and 2011. In 2011, for average one-earner couples with 2 children, the average tax wedge (income taxes plus employee and employer social security contributions minus cash transfers as a percentage of total labour costs) was 5 percentage points higher than the OECD average. For single taxpayers without children and two-earner couples with 2 children it was about 1 to 2 percentage points above the OECD average. In contrast, single parents earning 67% of the average wage faced a tax wedge that was almost 5 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 declined over the 11 years for all family types except average one-earner couples with 2 children, for whom it increased by 0.7 percentage points. Single parents experienced the sharpest reduction almost 15 percentage points.
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download the above graph and data for all OECD countries (xls/729kB)
From 2010 to 2011, the tax wedge moderately decreased for all the family types in the Taxing Wages Report. The tax burden decreased the most for single parents earning 67% of the average wage; their tax wedge dropped by 0.5 percentage points to 11.5% of total labour costs. Single taxpayers earning 67% of the average wage saw their tax wedge decrease by 0.4 percentage point to 33.1% of total labour costs. The tax burden decreased the least for average one-earner couples with 2 children; their tax wedge decreased by 0.1 percentage point to 30.7% of labour costs. For other family types, tax wedge decreased by 0.3 percentage points.
Employees and employers in the Netherlands are required to make contributions to privately-managed pension funds and health insurance companies.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 51.7% compared with the corresponding tax wedge of 37.8%. More information on these NTCPs in the Netherlands 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 the Netherlands was EUR 45 904 (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 Netherlands: 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 Netherlands 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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