ASPECTS CONCERNING LABOUR TAXATION IN OECD COUNTRIES

In countries with public social security systems well developed and large public expenditures, such as the EU countries, taxes on labor are high in order to support social spending, while the tax burden on capital is low. As a consequence in many countries there is a large tax wedge between labor costs of the employer and the employee's net wage. However labour tax wedge varies widely across OECD countries and the highest levels appear in: Belgium, Germany, France, Austria, Italy and Hungary, exceeding 46%. In this context the key for reducing the tax burden on labour might be lowering tax rates, broadening tax base and shifting towards indirect taxes.