Average tax and social security paid on employment income went up in 26 out of 34 Organisation of Economic Co-Operation and Development (OECD) countries in 2011.
Taxpayers in Ireland, Luxembourg, Portugal and the Slovak Republic were hit the hardest, while those in New Zealand and the US saw their tax fall.
In Hungary, single workers without children faced the largest tax rise in the OECD, but tax for families with children went down.
While only five countries raised income tax rates in 2011, the OECD report explained higher taxes resulted from finance ministers lowering tax free personal allowances and cutting tax credits.
The key points from the OECD report Taxing Wages 2011 included :
- The highest taxes for single workers without children who earned the average wage in their country were in Belgium (55.5%), Germany (49.8%) and Hungary and France (49.4%). The lowest were in Chile (7%), Mexico (16.2%) and New Zealand (15.9%) The OECD average was 35.3%.
- The highest tax paid by families with two children and a sole breadwinner earning average wages was 42.3% in France, Belgium (40.3%) and Italy (38.6%).
Families in New Zealand paid the least, with a 1.2% drop, followed by Chile (7%), Ireland (7.1%) and Switzerland (8.4%). The OECD average was 25.4%.
- All OECD countries except Mexico and Chile reported tax for families with children was less than that for singles without children.
The report analyses personal income tax trends trends over time, income thresholds where they apply, and other factors that shape personal income tax rates in OECD countries.
The findings revealed average OECD top rate income tax dropped in each of the last three decades, from 65.7% in 1980 to 46.5% in 2000, and to 41.7% in 2010. More recently, this trend has halted as more countries increased than cut their top income tax rates.
Although top rate income tax rate fell in 2011, the cuts were offset by rising social security payments. On average, the top “all-in” rate across the OECD decreased 4%, from 49.4% in 2000 to 45.4% in 2010, compared with the 4.8% reduction in the average top income tax rate.
Over the last decade, nearly two-thirds of OECD countries cut income thresholds for top rate income tax rate, though in the majority, the rate starts at more than twice the average wage.
Income tax rates fell for average earners across the OECD from 30.5% in 2000 to 27.4% in 2010, with average personal income tax rates dropping from 16% to 14.5%.