The old cliché about death and taxes holds true all across the world — but there are huge variations in the size of the bite that governments take out of employees' pay. We wonder: In which of the following countries does a single individual earning the average wage lose the smallest fraction of his or her pay to income and social insurance taxes?
A. Australia is not correct.
In Australia, the "tax wedge" — the percentage of one's take-home pay as a share of the total costs of employing them — stands at 28.1% for the average single person without children.
That means a single Australian with a total income of $41,275 actually has a take-home pay of $30,000 — with income, payroll and other direct taxes amounting to $11,275.
That is quite low — and roughly on par with that of Japan (28.8%), the United States (28.9%), Switzerland (29.7%) and Canada (32.1%).
B. France is not correct.
With taxes amounting to 50.2%, singles in France have to contend with one of the world's highest tax burdens.
In fact, France is one of only four countries where the average single employee actually takes home less than half of his or her total salary, according to the OECD. The three other nations to share that dubious distinction are Belgium (55.4%), Germany (52.5%) and Hungary (51.0%).
C. Ireland is correct.
Irish singles only have to pay 23.1% in taxes — the lowest of the nations listed above. Within the OECD, Ireland has the fourth-lowest tax wedge — with only Mexico (15%), Korea (18.1%) and New Zealand (20.9%) having lower levels of direct taxation.
In Europe, only the tax burdens in Iceland (28.6%) and Switzerland (29.7%) are similarly low.
D. Netherlands is not correct.
The tax wedge for a single worker at average earning levels in the Netherlands stood at 44.4% in 2006 — close to the average for the 19 EU countries belonging to the OECD (42.9%).
Other countries in that range include Sweden (47.9%) and Turkey (42.8%). In comparison, the average across the OECD's group of industrialized nations is 37.5%.