The average tax and social security burdens on employment incomes rose in most countries in 2010, reversing a trend toward declining tax burdens seen in previous years, according to a new OECD report. In most cases, though, any rise reported was small.

The OECD's annual “Taxing Wages” report shows that tax burdens rose in 22 of the 34 OECD countries. The Netherlands, Spain and Iceland were among the countries experiencing significant increases, while Denmark, Greece, Germany and Hungary were among those showing the biggest drops.

The report calculates the difference between the total cost to an employer of employing someone and that person's net take-home pay, including child benefits and other family benefits that are generally available to households. The “tax wedge” is derived as the total taxes paid by employees and employers net of cash transfers received divided by the employer's total payroll costs.

In 2010, “Taxing Wages” indicates that France, Belgium and Italy were the highest-tax countries for one-earner married couples with two children earning the average wage, with tax wedges of 42.1% in France, 39.6% in Belgium and 37.2% in Italy. Belgium, France and Germany had the highest tax wedges for single workers without children on average wages.

The report noted that Ireland increased income taxes and the health levy while it decreased child benefits. The impact of these reforms on the tax wedge has been partly offset by the decrease in the average wage.

For further details see http://www.oecd.org/document/45/0,3746,en_21571361_44315115_47822637_1_1_1_1,00.html