Taxes Around the World

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Taxes Around the World

For many Americans, their least favorite time of the year is tax season. But Americans actually pay lower income tax rates than people in many other countries. Let’s take a look at income tax rates around the world, including some countries that don’t collect any income tax at all.

Taxes Here at Home

In the U.S., the wealthiest 10 percent pay 25 percent of all payroll taxes. (1)

82%

Percentage of Americans who pay payroll or income taxes. The remaining 18 percent includes the elderly and those with annual incomes under $20,000.

1.6 million

New tax filers in the U.S., from 2010 to 2011 (2)

Average individual income tax rate by year (2)

1979: 11%

1980: 11.6%

1981: 11.9%

1982: 11%

1983: 10.2%

1984: 10%

1985: 10.1%

1986: 10.3%

1987: 10.2%

1988: 10.3%

1989: 10.1%

1990: 10%

1991: 9.8%

1992: 9.8%

1993: 9.9%

1994: 9.9%

1995: 10.1%

1996: 10.5%

1997: 10.9%

1998: 10.9%

1999: 11.3%

2000: 11.7%

2001: 10.2%

2002: 9.5%

2003: 8.3%

2004: 8.5%

2005: 8.8%

2006: 8.9%

2007: 9.2%

2008: 7.8%

2009: 7.2%

2010: 7.7%

2011: 8.4%

How They Compare

Tax rates vary dramatically by country. Let’s take a look at how some of them compare.

Highest top personal marginal income tax rate (most recent years available) (2, 3)

Denmark: 60.4%

Sweden: 56.7%

Portugal: 56.5%

France: 54.5%

Belgium: 53.7%

Netherlands: 52%

Spain: 52%

Finland: 51.1%

Japan: 50.8%

Austria: 50%

Israel: 50%

Slovenia: 50%

Canada: 49.5%

Italy: 48.6%

Ireland: 48%

Germany: 47.5%

Australia: 46.5%

United States: 46.3%

Iceland: 46.2%

Greece: 46%

United Kingdom: 45%

Luxembourg: 43.6%

Lowest top personal marginal income tax rate (most recent years available) (4, 5)

Latvia: 23%

Estonia: 21%

Armenia: 20%

Pakistan: 20%

Singapore: 20%

Slovakia: 19%

Hungary: 16%

Romania: 16%

Costa Rica: 15%

Czech Republic: 15%

Lithuania: 15%

Mauritius: 15%

Serbia and Montenegro: 15%

Ukraine: 15%

Russia: 13%

Bulgaria: 10%

Cote d’Ivoire: 10%

Kazakhstan: 10%

Paraguay: 10%

Countries Without Income Tax

A handful of nations don’t levy any personal income tax. Which countries are income-tax-free, and how do they fund their governments? (4)

United Arab Emirates

Boasting one of the world’s highest per-capita incomes ($49,000), the UAE has no personal income or capital gains taxes. But that doesn’t mean the country is tax-free.

55%

Maximum corporate tax rate

30%

Country’s GDP based directly on oil and gas production

5%

Monthly earnings go toward UAE social security system

30%

Sales tax on alcohol

Qatar

The world’s richest country (per-capita GDP of $100,000+), Qatar relies heavily on its natural resources, particularly natural gas.

35%

Tax rate levied on business involved in oil and gas operations

0%

Taxes on personal incomes, dividends, royalties, profits, capital gains and property

5%

Tax on imported goods

Cayman Islands

Known primarily as a tax haven for the wealthy, the Cayman Islands are popular among the 1 percent thanks to the lack of taxes on personal income and capital gains. The country also does not mandate social security contributions.

25%

Maximum fee on imports

50%

Ratio of foreign workers in islands’ workforce

Bahrain

Another oil-rich nation, Bahrain relies on the Abu Safa oilfield, which it shares with Saudi Arabia.

70% of Bahrain’s budget revenue comes from the Abu Safa oilfield.

7%

Contributions to social security by employees

10%

Municipal tax levied on expats who rent homes in Bahrain

The Bahamas

The Caribbean nation’s economy is heavily dependent on tourism and offshore banking.

70%

Government revenue that comes from duties on imports

3.9%

Employees’ mandatory social security contributions

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Sources:

1. http://www.whitehouse.gov
2. http://taxfoundation.org
3. http://www.nationmaster.com
4. http://www.cnbc.com