Tax wedge

Tax

Taxes are compulsory, unrequited payments to general government. They are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments. The OECD methodology classifies a tax according to its base: income, profits and capital gains; payroll; property; goods and services; and other taxes. Compulsory social security contributions paid to general government are also treated as taxes, and are classified under a separate heading.

English Also available in: French

Related Content:
- Revenue Statistics

Related Databases:
- OECD Tax Statistics

Keywords: revenue statistics, Tax, Tax revenue, Taxation, taxing wages, model tax convention

https://doi.org/10.1787/76e12892-en

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Tax wedge

Tax wedge is defined as the ratio between the amount of taxes paid by an average single worker (a single person at 100% of average earnings) without children and the corresponding total labour cost for the employer. The average tax wedge measures the extent to which tax on labour income discourages employment. This indicator is measured in percentage of labour cost.

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English Also available in: French

Keywords: tax on average worker, total labour cost, tax wedge, labour cost ratio

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