Tax burdens

OECD Observer

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The taxman is taking a smaller bite out of pay cheques in many OECD countries, but married couples with children are still often given substantially bigger breaks than their single or childless counterparts, the latest issue of Taxing Wages found.

The OECD report compares what workers are paid with what actually ends up in their pockets, taking into account personal income tax, employee social security contributions and any family-related cash benefits from the government.

The average single production worker in Germany, Hungary, Iceland and Luxembourg can expect to find his or her tax rate more than 20 percentage points higher than that of married colleagues with families. In 15 other countries the rate is at least 10 percentage points higher.

And while the tax bill for a married production worker with two children fell in 19 OECD countries between 2000 and 2002, there are still wide differences between OECD countries. A married couple with two children in Iceland actually receives the equivalent of 3.2% extra wages from the government, thanks to tax credits and family benefits, while the same family in Denmark would be paying 30.5% of its income into government coffers.

©OECD Observer No 236, March 2003

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