The latest OECD report Taxing Wages 2015 shows that the taxation of wages rose slightly for workers in the countries of the OECD between the years 2010 and 2014. Most of the countries have not raised their rates of income taxation but the increase has been due to wages rising more quickly than tax allowances and credits.

The tax burden was found to have risen in 23 of the OECD countries, fallen in nine countries and remained unchanged in two. The average tax burden on workers in OECD countries was 36.0% in 2014.

Movements in the overall burden of taxation on labor are important because the income tax paid by employees and the social security payments by employees and employers are important factors when individuals consider employment choices and when businesses take decisions on hiring workers.

The burden of tax and social security payments is measured by computing the tax wedge. This is the total amount of taxes on employees and employers less the family benefits paid to workers, as a percentage of the total labor costs on the employer.

In addition to presenting these statistics on OECD countries the report also contains a section examining the tax burden on wages in Brazil, China, India, Indonesia and South Africa. This reveals that the tax wedge in Brazil and China is similar to that in OECD countries while in India, Indonesia and South Africa there is a much lower tax wedge that in the OECD.

It is also worth noting that in Brazil, China, India and Indonesia most of the tax burden measured in respect of working households comes from social security contributions rather than income tax. In the non-OECD countries family payments did not significantly reduce the tax burden on households with children, as they do in OECD countries.

In the OECD countries the element that contributed most to increasing the total tax wedge in 18 countries was personal income tax. The report notes that the largest rise was in Ireland where the income tax rates and thresholds and the basic tax credit were all unchanged since 2011, leading to a higher tax wedge (an increase of 1.1%).