Individual’s Tax Burdens Rose in 2011 in OECD

April 26, 2012 International Tax Cooperation

Personal Income Taxes are rising around the worldCumulative tax obligations for individuals are rising around the world, with most OECD countries increasing the overall tax burden on taxpayers throughout 2011 by reducing tax allowances and increasing personal income tax rates.

On April 25th the Organization for Economic Cooperation and Development published the latest edition of its annual Taxing Wages Report, which showed that the average tax and social security burden on employees increased in 26 out of 34 OECD member countries during the course of 2011.

According to the report, in most cases the increased tax burden was due to a rise of effective rates of personal income taxes, and not due to hikes in social security contributions. However, out of the 24 countries which raised the cumulative tax obligations for taxpayers, only 5 countries increased tax rates on incomes, while the other countries resorted to reducing tax free allowances and removing available tax credits for individuals.

Some countries bucked the trend and decreased the overall tax liabilities for individuals, with the report noting that New Zealand and the USA both saw a drop in the overall tax obligations for individuals, with a 1.1 percent and 0.9 percent drop respectively.

The report indicated that the highest tax burden across all OECD countries is currently for taxpayers in Belgium, who will pay nearly 55.5 percent of their cumulative annual income in taxes. Taxpayers in Germany will face taxes of 49.8 percent, and individuals in Hungary and France will see a rate of 49.4 percent.

In all OECD countries, aside from Mexico and Chile, the proportionate tax liabilities faced by families with children was lower than the taxes for single individuals without children.

Taking into consideration all available tax breaks, allowances, and benefits, currently the lowest rates of personal taxes are faced by taxpayers Chile, Mexico and New Zealand, with effective overall rates of 7 percent, 12.3 percent, and 13.5 percent respectively.

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