Sum of personal income tax and employee plus employer social security contributions together with any payroll tax less cash transfers, expressed as a percentage of labour costs.

Definition Estimate of the overall financial effects of taxes on an area of the market. A tax wedge might be calculated to determine how higher payroll taxes ultimately affect hiring and retail consum [..]

Tax wedge is the difference between workers’ pay that they take home and what it costs to employ these workers. For example, a worker gets paid $600 per week, but since the governments take a variety [..]