Friday, April 19, 2013

Which Nations have the Highest Top Marginal Tax Rate?


A brief by the Tax Policy Center looks at the top individual marginal tax rates for a selection of developed economies (i.e the OECD nations), putting the current top rates in Canada, the United States and the United Kingdom into perspective when compared to their peers.  While most people really don't like paying taxes, it looks like those top-drawer individuals in some nations pay a far greater share of their income than others.

Here is a bar graph showing the comparison:


The United States new 39.6 percent top federal individual income tax rate, when combined with California's 13.3 percent top state federal tax, brings the top American tax rate up to 47.6 percent, the highest that it has been since it first dropped below the 50 percent mark in the 1980s.  That said, out of the 35 nations in the study, the current top combined tax rate puts the United States firmly in the middle of the pack with the 17th highest rate, up from 21st place in 2012.  

Canada sits just above the United States with the 15th highest top tax rate of 49.97 percent for those living in Quebec and 50 percent of earned income for those living in Nova Scotia as shown here:


The United Kingdom comes in with the 9th highest top tax rate of 50 percent (rate until April 6th, 2013 when it drops to 45 percent) as shown here:


The highest overall top individual income tax rates are found in Europe with Denmark having a top tax rate of just over 60 percent and Sweden having the second highest top tax rate of 56.6 percent.  This is largely related to the cost of providing social programs to taxpayers in both nations.  By comparison, the lucky high income earners in the Czech Republic pay a paltry 15 percent and those in Hungary pay a mere 16 percent, the lowest in the OECD.

All-in-all, the highest income earners in both Canada and the United States don't have it as badly as they might.  And yes, we all know that there are plenty of tax reduction schemes that are generally only available to the wealthy, reducing the posted rates greatly.



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