Fact of the Week: OECD Countries More Reliant on Corporate and Social Insurance Taxes for Tax Revenue

Source: Daniel Bunn, “Sources of Government Revenue in the OECD,” (Tax Foundation, February 2022).

Commentary: Between 1990 and 2020, the Organization for Economic Cooperation and Development (OECD) has become more reliant on corporate and social insurance taxes and less reliant on individual taxes for revenue. In 1990, individual taxes on average accounted for 30 percent of revenue among the OECD countries, compared to 24 percent in 2020. In contrast, the average share of revenue for social insurance taxes rose from 23.3 percent to 26.4 percent, and the average share for corporate taxes rose from approximately 8 percent to 9.2 percent.

Some clear regional trends stand out with respect to reliance on the different kinds of taxes. For example, the Nordic countries and Australia and New Zealand are the most reliant on individual taxes for revenue. In contrast, Latin American countries are the least reliant on these taxes. Latin American countries are the most reliant on corporate taxes for revenue—these taxes account for more than a fifth of tax revenue for Chile, Colombia, and Mexico—while Eastern European countries are the least reliant. Eastern European countries are the most reliant on revenues from social insurance taxes, which account for almost half of all revenue for Czechia and Slovenia.