As a tax paying worker I often wonder how much I am getting ripped off. What do I really get for all that tax money I pay and are people in other countries better or worse off?
In this article we compare the income tax rates of the highest and lowest tax paying countries in the world, and then compare to rates in Australia, NZ, United States, Canada and the UK.
Which country has the highest income tax rates?
Surprisingly Belgium tops the list with the highest tax rates in the world. If you live in Belgium you can end up paying up to 54% of your income in taxes! Close behind Belgium are other western european countries like Finland, Germany and Denmark.
Which country has the lowest income tax rates?
I had always believed that Dubai had no income tax so wanted to confirm this, and yes that is correct. The United Arab Emirates boasts not only year-round sunny weather, but there is also no income tax!
How do we compare?
Australia – For individuals, Australians are taxed as per the below table
| Taxable income | Tax on this income | Effective tax rate |
|---|---|---|
| 0 – $6,000 | Nil | 0% |
| $6,001 – $37,000 | 15c for each $1 over $6,000 | 0 – 12.6% |
| $37,001 – $80,000 | $4,650 plus 30c for each $1 over $37,000 | 12.6 – 21.9% |
| $80,001 – $180,000 | $17,550 plus 37c for each $1 over $80,000 | 21.9 – 30.3% |
| $180,001 and over | $54,550 plus 45c for each $1 over $180,000 | 30.3 – 45% |
Source Wikipedia
New Zealand – Suprisingly, NZ tax rates are lower than their Australian counterparts, as per the table below.
| Income | Tax rate |
|---|---|
| $0 – $14,000 | 10.5% |
| $14,001 – $48,000 | 17.5% |
| $48,001 – $70,000 | 30% |
| Over $70,000 | 33% |
| No-notification rate | 45% |
Source Wikipedia
America – Nothing is ever straightforward in the States… below is what I could find regarding their basic federal income tax structure. This is by no means the complete picture as there are a lot of complications. You can read more about it on Wikipedia if you would like to find out the details.
| Marginal Tax Rate | Single | Married Filing Jointly or Qualified Widow(er) | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $8,700 | $0 – $17,400 | $0 – $8,700 | $0 – $12,400 |
| 15% | $8,701 – $35,350 | $17,401 – $70,700 | $8,701 – $35,350 | $12,401 – $47,350 |
| 25% | $35,351 – $85,650 | $70,701 – $142,700 | $35,351 – $71,350 | $47,351 – $122,300 |
| 28% | $85,651 – $178,650 | $142,701 – $217,450 | $71,351 – $108,725 | $122,301 – $198,050 |
| 33% | $178,651 – $388,350 | $217,451 – $388,350 | $108,726 – $194,175 | $198,051 – $388,350 |
| 35% | $388,351+ | $388,351+ | $194,176+ | $388,351+ |
Source Wikipedia
Canada – For Canada the federal tax rates for 2012 are outlined below. Canada is considered to have an “average” tax rate compared to other countries in the OECD.
15% on the first $42,707 of taxable income, +
22% on the next $42,707 of taxable income (on the portion of taxable income over $42,707 up to $85,414), +
26% on the next $46,992 of taxable income (on the portion of taxable income over $85,414 up to $132,406), +
29% of taxable income over $132,406.
Source Canada Revenue Agency
United Kingdom – An interesting system. Every individual has a personal “allowance” and their income up to this point each tax year is not taxed. If you want more info on this you may want to research more about it, however other than that the basic structure is below.
| Rate | Dividend income | Savings income | Other income (inc employment) | Band (above any personal allowance) |
|---|---|---|---|---|
| Lower rate | N/A | 10% | N/A | £0 – £7,445 applies only if total income falls in this band |
| Basic rate | 10% | 20% | 20% | £7,445 – £37,400 |
| Higher rate | 32.5% | 40% | 40% | over £37,400 |
| Additional rate | 42.5% | 50% | 50% | over £150,000 |
Source Wikipedia
In summary, its hard to say where the “best” place is to live. Obviously there are additional factors which impact our lives besides just tax rates. Needless to say I won’t be moving to Belgium any time soon as it’s already a struggle on the tax rates imposed down under.
Comments
Powered by Facebook Comments
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment