Despite Low Wages, Hungarians Pay 3rd Highest Taxes On Income Among OECD Countries

  • 7 Aug 2017 8:40 AM
Despite Low Wages, Hungarians Pay 3rd Highest Taxes On Income Among OECD Countries
Recently, the Organization for Economic Co-operation and Development (OECD) published a report, entitled “Taxing Wages,” on the amount that workers in various developed countries ranging from the US to Australia to EU member states pay on the income that they receive.

This year’s report examines “details of taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers, and cash benefits received by in-work families” for the years 2015-2016.

And according to the report’s findings, despite the fact that the average wage in Hungary is significantly lower than in wealthier countries such as Germany, the US, or the United Kingdom, workers in the small Central European country nevertheless see 48.2% of their gross paycheck go to the state.

Hungary has the third-highest ‘total tax wedge’ of any OECD country, surpassed only by Belgium and Germany. By comparison, the United States, where 31.7% of gross wages are lost to taxes, is in 26th place, while the average for all OECD countries stands at 36%. You can view a graph summarizing these numbers below:

As news outlet Magyar Nemzet points out, if one takes into account the tax breaks that Hungary provides to families of two or more children, the situation improves somewhat. In that case, taxes take 33.7% of gross wages, instead of the baseline 48.2%.

In this category, Hungary’s tax rate is 12th-highest among OECD countries. While this is a significant drop from its position in the category of taxes paid without such benefits, it is still 3-6 percentage points behind neighbors Poland, Slovakia, and the Czech Republic in this area.

You can read the OECD report in its entirety here.


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