Recently, the Institut économique Molinari (IEM) released a study to compare the tax and social security burdens of individual employees earning a typical salary in the European Union. Using this data, they worked out the “Tax Liberation Day” for each nation, the day of the year when employees would earn enough to pay their annual tax burden.
Essentially, it marks the day workers stop working earning money for the government and instead begin working for themselves. The further into the year the day is, the greater burden each government places upon its citizens.
Workers across the EU saw an average real tax rate of 44.8%, nearly half of which (44.4%) is invisible to the employees themselves through payroll taxes. This is a marginal decrease from 2016, which had a rate of 44.96%. The “real tax rate” is calculated by adding social security contributions, income tax, and value added taxes, then dividing this number by the real gross salary.
The nation with the highest tax rate was France, coming in at 57.41% and a Tax Liberation of July 29th, where it has been for the last three years. Hungarian workers have also seen a significant gain, moving from August 6th in 2010 to July 5th. However, Greece has moved the opposite direction, from June 13th in 2010 to July 10th.
According to the study, the future seems difficult for European workers, who are spending more money on pensions and health care expenditures, but have a declining labor force participating, despite decreased unemployment. It concludes that the best hope against future tax increases is decreased expenditures and economic growth. The study and a full list of where the Tax Liberation Day lands for each European Union nation can be found here.