Rising nominal wages cause tax increase for OECD labour in ’22: Report
With inflation hitting a more than 30-year high in 2022, real tax rates have increased in the majority of OECD countries across a range of income levels and household types, with significant increases for families have children, especially at lower income levels. according to the OECD’s Taxed Wages Report 2023.
Nominal wage increases in the OECD have pushed workers into higher tax brackets, leading to higher taxes on workers. Real tax rates will increase in most OECD countries by 2022. Low-income households with children are most vulnerable to increases in real tax rates when tax and welfare systems are not fully adjusted for inflation. broadcast.
The different approaches that OECD countries take to indexing their tax systems and inflationary benefits show that 17 OECD countries automatically adjust their personal income tax systems to inflation, while the remaining 21 countries do so on a discretionary basis. Social security contributions and cash benefits are automatically adjusted in 21 and 19 countries, respectively.
Low-income households with children are most vulnerable to effective tax rate increases when tax and welfare systems are not fully adjusted for inflation, the report highlights.
For a single worker earning the average wage, the tax wedge ranges from 53% in Belgium to 0% in Colombia by 2022, an average of 34.6% across the OECD.
Fiber2Fashion (DP) News Desk