U.S. Workers Face a Tax Burden of 31.5 Percent

Richard Borean

Tuesday, July 21st, 2015

U.S. wage earners face a 31.5 percent tax burden on their pre-tax income according to a new report from the nonpartisan Tax Foundation. Although this burden is high, the average across the 34 countries in the OECD is slightly higher, at 36 percent.

Using the latest data from the OECD, the report hones in on U.S. tax policy and explains the breakdown of the average U.S. worker’s tax burden, how it compares to other developed countries, and why workers bear the weight of this tax burden in the end.

An average wage earner’s tax burden is comprised of income taxes and both the employee-side and employer-side payroll tax. Although a little more than half of a worker’s payroll tax burden is paid by their employer, the worker ultimately pay the full burden of this tax through lower take-home pay. While the revenues from these taxes pay for government programs, it is important to know what the cost of these programs are from the average worker’s perspective.

Key findings include:

  • Average wage earners in the United States face two major taxes: the individual income tax and the payroll tax (levied on both the employee and the employer).
  • Although a little more than half of a U.S. worker’s payroll tax burden is paid by his employer, the worker ultimately pays this tax through lower take-home pay.
  • The total tax burden faced by average wage earners in the United States is 31.5 percent of their pretax earnings, paying $17,372 in taxes in 2014, with $8,631 in individual income taxes and $8,741 in payroll taxes.
  • The total tax burden faced by average U.S. workers is the 24th highest in the OECD, below the 34-country average of 36 percent.
  • In the absence of income and payroll taxes and the benefits they provide, the average worker would take home nearly $5,000 in additional annual income for a total of $54,977.
  • Many OECD countries have high payroll taxes, such as France, which places the highest payroll tax burden of 37.9 percent on average workers.
  • In some countries, over 50 percent of workers’ total tax burden is paid by their employers.
  • The tax burden for families in OECD countries is 25.9 percent lower on average than the tax burden on single, childless workers

 “Although the United States and most OECD countries are known for having progressive tax systems that tax high-income earners more than low- or moderate-income earners, a large portion of the tax burden still falls on the average worker,” said Tax Foundation Economist Kyle Pomerleau.

“Even here in the United States, which has lower tax burdens than most other OECD countries, average workers end up paying nearly one-third of their income in taxes. It is true that governments in the OECD, especially European countries, provide more government programs. However, their workers end up paying a much higher price for them.”

Full Report: A Comparison of the Tax Burden on Labor in the OECD