11/01/2021
When we compare living in different countries, one of the main things we focus on is the value of wages. Although, countless factors can affect even the most careful analysis, making it less accurate. Every country has its own taxation, healthcare system, social policies etc.
And while it can be difficult to take all these factors into account, we can still get a general idea of the wage value. We can base it on the amount of money an employee has left after paying all his taxes.
The Organization for Economic Co-operation and Development (OECD) monitors average wages, publishes and updates a model tax convention that serves as a template for allocating taxation rights between countries.
Based on this data, the Internet source HowMuch created this amazing infographic that can help us compare salary indicators and related taxes. It demonstrates which countries make their most productive population feed their own government and support the unproductive part of population, and which ones appreciate and reward those making money.
Look carefully at the diagram. Gross wage earnings - are the total amount you pay an employee before you withhold taxes and other deductions. Net wage earnings - are the amount the employee receives once gross wages have been reduced by deductions and taxes.
In the diagram below, each element is highlighted by color:
▫️ The total size of each sector measures the gross income (red+pink+green)
▫️ Red color – income tax (% of the gross income)
▫️ Pink color – taxes related to social welfare (% of the gross income)
▫️ Green color – net income
Now, the most interesting part. The winner is Switzerland with employee’s average gross income of
$70,835 and net income of $58,864. Its leadership in this rating consists of high wages and relatively low taxation.
Here’s a few more examples that show us an even more interesting picture.
Take a look at South Korea. With its 14th place for the average gross income ($52,505), it takes the 4th place for the net income of average employee ($44,892). It can be explained by their relatively low taxes (14.5%), which gives them the 3rd place among all members of OECD. Chile and Mexico are even more loyal (7.0% and 11.2% respectively), but their gross income levels are much lower.
The Belgium, on the other hand, takes the 6th place for its average gross income ($58,545), but only lets employees receive $34,834 of net income. Due to its high taxation (40.5%) Belgium can’t compete against Ireland, for example, with its gross income of $45,093 and net income of $36,345.
According to the average net income per employee, the Top-10 looks like this:
1️⃣ Switzerland: $58 864 (16,9% tax)
2️⃣ Luxembourg: $46 593 (29,1% tax)
3️⃣ Iceland: $45 390 (28,7% tax)
4️⃣ South Korea: $44 892 (14,5% tax)
5️⃣ Netherlands: $43 835 (30,4% tax)
6️⃣ Australia: $41 655 (24,4% tax)
7️⃣ Great Britain: $41 608 (23,4% tax)
8️⃣ Japan: $41 139 (22,3% tax)
9️⃣ Norway: $40 834 (27,6% tax)
🔟 USA: $39 211 (26% tax)
Notes:
The Organization for Economic Co-operation and Development (OECD) is an intergovernmental economic organization with 37 member countries, founded in 1961 to stimulate economic progress and world trade. It is a forum of countries describing themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members.
The headquarters is located in Paris, France.
