The Top Ten Countries with the Highest Tax Rates

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.