With the globe still struggling to recover from the worst recession since World War II and elections occurring in Europe and the USA, taxes have once again become a hot topic of conversation as many countries propose further rises. But which countries currently have the highest income tax rates?
5. Japan, Belgium, Austria, UK (tied)
The top income tax rate for Japan, Belgium, Austria and the UK is 50%. As the only Asian country in the top 5 highest income tax rates in the world, Japan’s top tier rate of 50% is more than double Asia’s average of 23%. Despite this, its tax revenue is the fifth lowest amongst OECD member countries due to a rocketing national debt crisis.
Western Europe may have the highest income tax rates of any region in the world but Belgium’s highest tax rate is still 5% higher than the average. Belgians are lumped with the highest tax and social security burden, regardless of income, of any OECD member. Austria may frequently be ranked as one of the best places to live in the world but they are certainly taxed for the privilege! When the UK raised its top income tax rate to 50% in 2010 it leapt from the 13th to the 4th highest income tax rate in the European Union and was the biggest top-rate income tax hike in the world that year.
4. The Netherlands
At 52%, well above Western Europe’s average of 45.7%, The Netherlands’ top income tax bracket is undoubtedly high but it does help to pay for a wealth of benefits. The Dutch enjoy reimbursements of up to 70% on childcare, subsidies on children’s books, money towards holidays which amounts to 8% of an individual’s salary, and free medical care.
Denmark’s income tax rate for its top band of wage earners may have come down from 62.3% in an economy-boosting drive in 2008 but it is still 55.4%, making it the third highest rate in Western Europe. However, these tax cuts have also decreased the tax and social security burden on single taxpayers.
At 55.6%, Sweden’s top income tax rate is higher than any other Scandinavian country and the second highest in the world. However, its taxes fund an incredibly generous social security system – Sweden spends more of its GDP on social services than any other country in the world – which allows Swedes to enjoy free education, subsidised healthcare and public transport, and a government-guaranteed pension.
Not many would guess that the country with the highest income tax in the world is Aruba. The tiny Dutch territory in the Caribbean has a top tier income tax rate of 59%, far higher than the Caribbean average of 26.7% and astronomically higher than the Bahamas, Bermuda and the Cayman Islands which have no income tax at all. However, the island also boasts one of the highest standards of living in the Caribbean.
Aruba may not stay at the top spot for much longer if the newly elected French president Francois Holland has his way. To help pay off the country’s crippling debt, Holland is proposing to raise the income tax rate on the wealthiest (those who earn over €1 million) from the current 48% to a whopping 75%!
This articles is provided by My Refund, the New Zealand registered tax agent www.myrefund.co.nz