OECD study: Austria’s tax burden is still high by comparison

Taxes and fees for local employees are still high in international comparison. The “Payroll Taxes” study was also published on Tuesday by Organization for Economic Co-operation and Development It shows that the tax burden for the average worker in Germany fell by one percentage point from 47.8% in 2021 to 46.8% in 2022. However, Austria has the fourth highest “tax wedge” among the 38 OECD member states.

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This was 34.6 percent in the OECD region last year. The so-called “tax wedge” includes not only the taxes that must be paid by employees (that is, payroll taxes and social security contributions), but also the employer’s contributions to Social Security less the family benefits received.

With 46.8 percent of total wage costs, Austria ranks fourth in taxation for middle-income earners without children – after Belgium, Germany and France. In 2021, Austria was still in third place with 47.8 percent.

Taxes fell for workers with children

In contrast, taxes for employees with children fell dramatically the previous year. The figure for a single-parent couple with two children was 30.2 percent in 2022, up from 34.1 percent the year before, making it the 13th largest “tax wedge” in the Organization for Economic Co-operation and Development. The OECD average was 25.6% (2021:24.6). In 2021 Austria was still in eighth place.

The “tax wedge” for the average worker with two children was 16.6 percentage points lower than the average earner without children. On average across OECD countries, the difference was 8.9 percentage points.

The tax burden on business in general has increased

Overall, the OECD notes, the tax burden on employment increased in 2022 as higher nominal wages led to higher taxes and workers were less likely to qualify for tax breaks and transfers. At the same time, real wages fell due to inflation in the OECD region. As a result, employees were negatively affected in two ways. Inflation hits its highest level in more than 30 years in 2022.

The OECD study focuses on the international comparison of the “tax wedge”. A total of eight types of families were examined, which differed in terms of income level and composition. For individuals earning an average income, the “tax wedge” in 2022 ranged from 53 percent in Belgium to 0 percent in Colombia. The average value across the OECD region was 34.6 percent.