Effective Tax Burden On Highly Qualified Employees

by Elschner, Christina; Schwager, Robert

• ISBN13: 9783790815689
• ISBN10: 3790815683
• Format: Paperback
• Copyright: 2005-04-06
• Publisher: Physica Verlag

Summary

Taxes on the highly skilled are an important cost factor for companies competing internationally for talent. This book provides an international comparison of the effective level of taxes and social security charges imposed on highly qualified employees. Based on a newly developed inter-temporal simulation model, the attractiveness of 7 EU member states, 12 Swiss cantons, and the United States is assessed. Several compensation packages including old-age provision, fringe benefits, and long-term incentives as well as various income levels and family situations are considered in the analysis. The book also contains a comprehensive survey of social security and tax systems in the countries studied.

Table of Contents

Executive Summary	1	(6)
1 Aim of the Study	7	(2)
2 The Methodology	9	(18)
2.1 Total Remuneration, Disposable Income, and the Effective Average Tax Rate	9	(5)
2.1.1 Mobility and Tax Shifting	9	(2)
2.1.2 The Effective Average Tax Rate	11	(1)
2.1.3 Inter-Temporal Structure	11	(1)
2.1.4 Computation	12	(2)
2.2 Model Specifications	14	(9)
2.2.1 Macroeconomic Data	14	(1)
2.2.2 The Employee's Characteristics: Income Level and Family Situation	14	(1)
2.2.3 Taxes and Social Security Contributions	15	(4)
2.2.4 Compensation Components	19	(4)
2.3 Geographical Coverage and Time Horizon	23	(1)
2.4 Comparison with Existing Approaches	24	(3)
2.4.1 Measures of Company Tax Burdens	24	(1)
2.4.2 Measures of Labour Tax Burdens	25	(1)
2.4.3 Measures of the Tax Implicit in Public Pension Schemes	26	(1)
3 Description of Tax and Social Security Systems	27	(28)
3.1 Social Security, Occupational Pension Plans, and Various Charges	27	(10)
3.1.1 Old-Age, Disability, and Survivor Insurance and Occupational Pension Plans	27	(6)
3.1.2 Health Insurance	33	(1)
3.1.3 Family Allowances	34	(1)
3.1.4 Work Injury and Unemployment Insurance and Other Charges	35	(2)
3.2 The Tax Systems in the Analysed Countries	37	(10)
3.2.1 Austria	38	(1)
3.2.2 France	39	(1)
3.2.3 Germany	40	(1)
3.2.4 Ireland	41	(1)
3.2.5 Italy	41	(1)
3.2.6 The Netherlands	42	(1)
3.2.7 Switzerland	43	(2)
3.2.8 United Kingdom	45	(1)
3.2.9 United States	46	(1)
3.3 Compensation Components	47	(8)
3.3.1 Cash Compensation	47	(1)
3.3.2 Perquisites: Company Car	47	(2)
3.3.3 Long-Term Incentives: Employer-Provided Stock Options	49	(1)
3.3.4 Pension Schemes	50	(5)
4 The Effective Tax Burden in the Analysed Countries	55	(14)
4.1 Austria	55	(1)
4.2 France	56	(1)
4.3 Germany	57	(2)
4.4 Ireland	59	(1)
4.5 Italy	60	(1)
4.6 The Netherlands	61	(2)
4.7 Switzerland	63	(3)
4.8 United Kingdom	66	(1)
4.9 United States (Massachusetts)	67	(2)
5 International and Inter-Regional Comparison	69	(14)
5.1 The Standard Case	69	(4)
5.1.1 International Rankings	69	(2)
5.1.2 The Progressivity of the Tax and Social Security System	71	(1)
5.1.3 The Changes from 2002 to 2003	72	(1)
5.2 Pension-Oriented Employees	73	(2)
5.3 Long-Term-Incentive-Oriented Employees	75	(2)
5.4 Family Taxation	77	(3)
5.5 Comparison with the Effective Tax Burden of Companies	80	(3)
6 The Importance of Social Security	83	(4)
6.1 The First Pillar of Old-Age Insurance	83	(2)
6.2 All Social Insurances	85	(2)
7 Summary and Conclusions	87	(2)
A Appendix	89	(26)
A.1 Social Security Contributions and Charges	89	(2)
A.2 Tax Deductions and Tax Credits	91	(3)
A.3 Detailed Results	94	(21)
List of Tables	115	(2)
List of Figures	117	(2)
List of Abbreviations and Symbols	119	(2)
References	121