“Taxing Wages 2011 includes a special feature that analyses trends over time in statutory PIT and employee SSC rates, the income thresholds where they apply, and other statutory provisions that shape average and marginal personal tax rates in OECD countries.
The most pronounced trend has been the reduction in top statutory PIT rates, inclusive of surtaxes and sub-central income taxes. The average OECD-wide top statutory PIT rate decreased significantly in each of the last three decades, from 65.7% in 1980 to 46.5% in 2000, and to 41.7% in 2010. More recently, this trend appears to have come to a halt – , in 2010 and 2011 more countries increased than reduced their top PIT rates.
The PIT for top wage earners fell in 2011, but these cuts were partly offset by employee SSC increases. On average the top “all-in” rate across the OECD fell by 4 percentage points, from 49.4% in 2000 to 45.4% in 2010, compared with the 4.8% reduction in the average top statutory PIT rate.
Over the last decade, almost two-thirds of OECD countries have reduced the income threshold at which the top statutory PIT rate starts to apply, though in the majority it is still more than twice the average wage. For people earning average wages, the statutory PIT rate fell across the OECD from an average 30.5% in 2000 to 27.4% in 2010, with the corresponding average personal income tax rate falling from 16% to 14.5%. For low income earners there were no clear trends in the level of income at which an individual starts to have to pay tax, or in the starting rate of tax.
Our problems are NOT a result of unions or pensions. They are a result of nonsensical supply-side theories conjured up by those who lack any grasp of reality and who are beholden to the moneyed interests. Trickle-down economics is a complete and utter failure. We tried it. It failed. We now have to go about fixing the mess that resulted from this, and that means getting revenues back to where they were when the economy was healthy. Get over it.
