Total Taxes on Wages Are Rising
AFTER the financial crisis, many
countries cut taxes to stimulate their economies. But since 2010, with
concerns about government debt rising, the trend has gone the other way.
The
Organization for Economic Cooperation and Development, a group of 34
countries that includes all major developed nations, on Friday released
its annual Taxing Wages report, looking at how its member countries tax
wage income. It found that average tax rates, which fell from 2007
through 2010, have since rebounded almost to 2007 levels.
The
rates shown in the accompanying chart are the O.E.C.D. estimates for the
taxes that would be levied on an unmarried person who earned the
average 2013 wage in the private sector in the country. You should note
that the percentage figures are not based on the salary, but on the
total cost of the employee to the employer, including corporate payments
of payroll taxes, like Social Security taxes in the United States.
The
United States has a total 2013 tax burden — called a tax wedge by the
O.E.C.D. — of 31.3 percent of total compensation, the study estimated.
That was up from 30.4 percent in 2012, an increase largely caused by the
end of the American government’s temporary reduction in Social Security
tax rates. That left the United States with total wage taxes well below
most of the other countries. The O.E.C.D. average was 36 percent.
Other
nations with substantial increases last year were Portugal, where tax
rates rose as the government followed a European-mandated austerity
policy aimed at cutting budget deficits, and the Slovak Republic, which
raised employer payroll taxes.
The O.E.C.D. said it thought
countries should be changing their tax laws to encourage economic
growth. “More needs to be done to shift the burden from labor to other
types of taxes,” said Bert Brys, a senior tax economist at the
organization’s Center for Tax Policy and Administration. He said
environmental taxes and national sales taxes could be raised while taxes
on wages were reduced, and he suggested that higher taxes on housing
might be called for, partly to ward off new property price bubbles.
Source:http://www.nytimes.com/2014/04/12/business/economy/total-taxes-on-wages-are-rising.html?ref=us
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