The old cliché about death and taxes holds true all across the world — but there are significant 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, childless 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 share of total employee earnings taken by the government stands at 26.9% for a childless single person earning the average wage.
That means a single Australian with a total income of about $41,000 actually has take-home pay of around $30,000 — with income, payroll and other direct taxes amounting to $11,000.
That level is quite low — and roughly on par with that of Japan (29.5%), the United States (30.1%) and Canada (31.3%).
B. Germany is not correct.
With taxes amounting to 52% of individuals' total wages, singles in Germany have to contend with one of the world's highest tax burdens.
In fact, Germany is one of only three developed countries where the average single, childless employee actually takes home less than half of his or her total salary, according to the OECD. The two other nations to share that dubious distinction are Belgium (56%) and Hungary (54.1%).
C. Ireland is correct.
Irish singles only have to pay 22.9% in taxes — the lowest of the nations listed above. Within the OECD, Ireland has the fourth-lowest tax level — with only Mexico (15.1%), Korea (20.3%) and New Zealand (21.2%) having lower levels of direct taxation.
In Europe, the only other countries with tax burdens below 30% are Iceland (28.3%) and Switzerland (29.5%).
D. Netherlands is not correct.
The tax level for a single, childless worker at average earning levels in the Netherlands stands at 45% — close to the average for the 19 EU countries belonging to the OECD (42.8%).
Other countries in that range include Sweden (44.6%), the Czech Republic (43.4%) and Finland (43.5%). In comparison, the average across the OECD's group of industrialized nations is 37.4%.
Overall, tax levels for average-earning singles fell slightly in many developed countries in 2008, with the largest decreases occurring in Turkey (a decline of three percentage points) and Poland (a fall of 3.2 percentage points). Taxes throughout the OECD may fall further in 2009, as some nations' fiscal stimulus packages contain tax reductions for middle-class earners.