The Top Ten Countries with the Highest Tax Rates
Only two things
in life are certain – death and taxes. And for some, an extremely high tax rate
is equivalent to death. But then again, for most people, any tax rate greater
than 0 percent is considered excessive.
In France, there
have been proposals to increase the tax rate for those earning more than $1.23
million to 75 percent from the current 48 percent. In the United States, the
top tax rate stands at 35 percent, with proposals calling for its increase to
39.6 percent. It was one of the most contentious issues during the last
presidential elections.
It is worth
noting, however, that in the case of France, only a miniscule .046 percent of
the population would be affected by the proposal to increase the tax rate for
the upper echelon of society. In the United States, the most vociferous of
those who oppose the increase are billionaire businessmen. The last time the
United States had such a high tax rate was during the Clinton administration,
and those years were marked by economic prosperity.
Maybe they would
not complain too much if they compare the rates being levied upon them to those
being charged to the upper echelon in other countries. Here are the top ten
countries with the highest tax rates in the world.
1. Aruba – 58.95 percent for those with income of at least
$171,149
The country is
known to have the highest standard of living in the Caribbean. This Dutch
territory has the highest income tax rate in the world. It actually used to
hover above 60 percent back in 2007. Married individuals who meet the income
requirement are charged a slightly lower 55.85 percent. The country also has a
25 percent tax on capital gains. The rate is double than the average rate in
the Caribbean, and especially astounding considering the zero income tax regime
in the Bahamas, Bermuda and Cayman Islands.
2. Sweden – 56.6 percent for those with income of at least $85,841
Sweden is a
welfare state where citizens get free education and subsidized healthcare.
Everyone is also guaranteed a basic pension. Even public transportation is
subsidized. All these are the results of an aggressive tax scheme by the
Swedish government in which those with extremely high incomes are levied a tax
rate of 56.6 percent. As this rate will only kick for those with income of
$85,841, most Swedes do not worry about it as it is way above the average
income of $48,800. Sweden also has a 30 percent tax on investment income, as
well as significant rates for property holdings and social security.
3. Denmark – 55.38 percent for those with income of at least
$70,633
This rate is
actually an adjusted rate already, as the top marginal rate used to be 62.3
percent in 2008. Denmark also taxes dividend income by 28 percent and
capital gains by 42 percent. Even the Danish church is not exempt, as they are
liable for taxes ranging from 0.4 to 1.5 percent. Gifts to relatives over
a certain threshold amount are also subject to 15 percent tax.
4. Netherlands – 52 percent for those with income of at least
$70,090
The Netherlands
has the highest tax rate in Western Europe, where the regional average stands
at 45.7 percent. Its government also charges capital gains tax of 25 percent,
land transfer tax of 6 percent and inheritance tax of up to 40 percent. Average
income in the country is $57,000.
5. Belgium – 50 percent for those with income of at least $45,037
Just like its
neighbor the Netherlands, Belgium’s tax rate is higher than the average for the
region. It also charges a social security rate of 13 percent for employees and
35 percent for employers, municipal taxes of up to 11 percent, and capital
gains tax of up to 33 percent. The country actually has the highest tax and
social security burden in the world, with single taxpayers taking home less than
45 percent of their actual income. Those in the higher income brackets
take home less than 40 percent. Average income in the country is $45,037.
6. Austria – 50 percent for those with income of at least $74,442
Austria is one of
the best places to live, so long as you are willing to pay for that privilege.
Aside from the high income tax rate, it also has a social security rate of 18
percent, bonus payments are charged 6 percent, and capital gains tax is at 25
percent. Money stashed away in Swiss banks is also taxed through a special
agreement between the Swiss and Austrian governments.
7. Japan – 50 percent for those with income of at least $228,880
Japan has the
highest income tax rate in the whole of Asia, where the average is only at 23
percent. Note however that the high rate only kicks in at $228,880, which is an
extremely high income level in a country where the average income is $53,200.
8. United Kingdom – 50 percent for those with income of at least
$234,484
This will only
last until April 2013, when the rate will be cut to 45 percent. Those earning
less than $14,300 are exempted from paying taxes. Social security taxes can be
as much as 14 percent, while capital gains can reach 28 percent.
9. Finland – 49.2 percent for those with income of at least
$87,222
The top rate used
to be 53.5 percent, but this was cut in recent years. Municipal tax can be as
much as 21.5 percent, and a church tax of up to 2 percent. Capital gains can
reach 28 percent. The government plans to increase taxes in 2015, with the new
rates targeting high income and pension owners and those receiving inheritances
above $1.3 million.
10. Ireland – 48 percent for those with income of at least $40,696
The top marginal
rate has been increasing steadily the past few years, as it stood at only 45
percent in 2008. Social security tax is at 4 percent. Taxes on gifts,
inheritances and capital gains can reach as much as 30 percent. It has the
lowest corporate tax rate in Europe, however, at only 12.5 percent.
