Blogs & Comment

Take Home Pay in OECD Countries

The OECDhas just released statisticsindicating how much governments took in taxes from wage earners in 2008. It calculates what it calls “the Tax Wedge, the difference between labour costs to the employer and the net take-home pay of the employee, including any cash benefits from government welfare programs.” The higher the tax wedge, the less the employee takes home. In Belgium, Hungary and Germany, the average single employee takes home less than half of the total cost to the employer. in another nine countries, all in Europe, the tax wedge is between 40% and 50% which translates to the employee to taking home less than 60% of gross wages. With a tax wedge of 31.3% in Canada, a single employee does relatively well taking home almost 69% of gross wages. So according to my calculations from the table below, a person who makes $50,000 per year in Belgium would their tax burden decline from $28,000 to $15,650 by moving to Canada. A move to Mexico would result in a reduction in taxes to $7,550.

Country Tax Wedge %
Belgium 56.0
Hungary 54.0
Germany 52.0
France 49.3
Austria 48.8
Italy 46.5
Netherlands 45.0
Sweden 44.6
Finland 43.5
Czech Rep. 43.4
Greece 42.4
Denmark 41.2
Turkey 39.7
Poland 39.7
Slovak Rep. 38.9
Spain 37.8
Norway 37.7
Portugal 37.6
Luxembourg 35.9
UK 32.8
Canada 31.3
USA 30.1
Japan 29.5
Switzerland 29.5
Iceland 28.3
Australia 26.9
Ireland 22.9
New Zealand 21.2
Korea 20.3
Mexico 15.1