In Italy the tax wedge, i.e. the difference between gross and net salary, decreased slightly in 2016, remaining however much higher than the EU average. The figure is all the more serious because the higher tax burden of our country applies to one gross salary starting point lower than those of the other major developed countries. This is what emerges from the annual study “Taxing Wages” created by the OECD, which sifts through the weight of taxes and payroll contributions in the 35 member countries.
In detail, last year in Italy the tax wedge for a single worker without children it was 47,8%, down by 0,08 points on 2015, but still very far from the OECD average, which is 36% (-0,07 points). For a single-income family with two children, the wedge is 38,6%, with a reduction of 0,1 points, against an OECD average of 26,6%.
In general, Italy has gone from sixth to fifth among advanced countries for the weight of taxes and contributions on single workers and from fifth to third in the case of single-income families. The ranking in the first case is headed by Belgium with a tax wedge of 54%, ahead of Germany (49,4%), Hungary (48,2%) and France (48,1%). Spain is fifteenth with 39,5%, the USA 25th with 31,7% and preceded by Canada and Great Britain (30,8%). The lightest tax with singles is in New Zealand (17,9%) and Chile (7%). The largest increase occurred in Greece, with +1 point to 40,2%.
In Italy, the drop in the tax wedge on singles derives from the decrease in contributions paid by the employer (-0,11 points), while income taxation rose by 0,02 points and contributions paid by the employer by 0,01 worker. The total cost of labor in Italy in the case of an average salary is estimated at 55.609 dollars per year at purchasing power parity, up from 55.672 in 2015 and is the 17th among OECD countries, where the average is 50.200 dollars . Belgium is first with almost 75 dollars, ahead of Switzerland (74.500) and Germany (73.700). The OECD average stands at 50.214 dollars.
As for the gross salary, or what is seen in the pay slip and includes taxes and contributions paid by the worker, Italy is in 19th place with 42.166 dollars, just below the OECD average (43.015 dollars). Income taxes (21,6%) and contributions paid by the worker (9,5%) account for 31,1% of gross wages against the OECD average of 25,5%. In other words, in Italy the average net salary received by the worker is equal to 68,9% of the gross against the OECD average of 74,5% and translates into 29.045 dollars (13 dollars more than the 29.032 in 2015) against the 31.600 of the OECD average, 33.900 in France and 37.260 in Germany and also below the 31.664 dollars in Spain. Without losing sight of the $55.609 total cost of labor paid by the employer.
In first place in the OECD for gross salary is Switzerland with 70.077 dollars, ahead of Luxembourg (65.500), Holland (63.500) and Germany (61.750). In Italy, the tax wedge then becomes even heavier in the case of high-income singles, rising to 54,1%, the highest level after Belgium and France, against an OECD average of 40,4%, but it does not give too many discounts to low-income workers (67% of the average wage), equal to 40,8% against the OECD average of 32,3%.
Moving on to taxation of single-income families, the heaviest tax authorities are the French one, with a tax wedge of 40%, ahead of the Finnish one (39,2%) and precisely the Italian one with 38,6%. If there are two incomes in the family, the wedge is 38,4% with a decidedly low second income (33% of the average income) and 41,5% if the second income is equal to 67% of the average income. In both cases, these are higher than the OECD averages, which are 28,2% and 30,9% respectively.
Taking into consideration the family allowances and tax breaks, the levy on the gross wages of an average worker with two children is reduced to 19%, the tenth highest in the OECD against an average of 14,3%. This means that the worker takes home 80,9% of the gross salary against the OECD average of 85,7%. Last but not least, the OECD calculates that the tax wedge for the average worker increased by 0,7 percentage points in Italy between 2000 and 2016, going from 47,1% to 47,8%, while in the same period the average OECD wedge decreased by 1 percentage point from 37% to 36%. Furthermore, since 2009, therefore with the start of the crisis, the wedge has increased by 1 point in Italy against 0,8 points in the OECD.
