On 23 June 2020 the OECD issued the 2020 update to the brochure introducing the OECD’s Tax Database.

Households – Tax Wedge

The database looks at the average tax wedge for four different types of family, looking at the tax wedge of the average worker; the two-earner married couple; the one-earner married couple; and the single person with two children. The average tax wedge is measured by looking at the effective tax rate on labour costs, expressed as the difference between the labour costs to the employer and the net pay taken home by the employee. The tax wedge takes into account the personal income tax, employee and employer social security contributions (SSCs) and payroll taxes, less cash benefits received by the employee. The resulting figure is expressed as a percentage of labour costs, which are gross wages, employer SSCs and payroll taxes paid by the employer.

The database shows that by 2019 the average tax wedge had decreased in comparison to levels in 2000 by around 2.2 percentage points. However the tax wedge in 2019 differed greatly according to the type of family, amounting to 15.8% for a single person with two children earning 67% of the average wage and 40.3% for a single person with no children earning 167% of the average wage.

Personal Income Tax Rates

In 2019 the highest statutory rate of personal income tax (PIT) was more than 30% in all but five of the OECD countries. Of those five countries, a single rate of PIT was applicable to all levels of taxable income in the Czech Republic (15%), Estonia (20%) and Hungary (15%). The statistics show that eleven of the OECD countries were applying a top personal tax rate of more than 50% in 2019. Since 2000 the highest PIT rates have decreased in most of the OECD countries. The largest decrease has been in Hungary where the top rate has decreased from 40% to 15%.

Corporate Income Tax Rates

The database looks at the statutory corporate income tax (CIT) rates by computing the combined central and sub-central headline tax rate in each country. The central government CIT rate, minus any deduction for the sub-central tax paid, is added to the sub-central tax rate. If the CIT system has a progressive rate structure the top marginal rates are used. In 2020 the combined statutory CIT rates in the OECD countries ranged from 9% in Hungary to more than 30% in Portugal and France. Between 2000 and 2020 the statutory CIT rates decreased in all OECD countries except Chile, with a decrease of 9 percentage points in the OECD average statutory CIT rate since 2000.

Value Added Tax Rates

In 2019 the standard rate of value added tax (VAT) ranged from 27% in Hungary to less than 10% in Japan, Switzerland and Canada.