World’s Lowest and Highest Income Tax Percentages Taxes have and continue to be a sore subject amongst Americans. They received a reception in the form of a nice little tea party in the 1700s and have been held in contempt ever since. Everywhere you look, you can find people sweating and worrying about how much money they lose to income taxes every month. You’d be interested to know that where income taxes are considered, America stands in the moderate percentage level compared with much of the world though. The U.S. stands neither at the most expensive tax system, nor the least expensive. Those rankings belong to the following six countries.
Belgium At one of the most expensive levels, Belgium holds a pretty good lead. Citizens of Belgium are taxed at a marginal rate of 54.9%. According to an article from Forbes.com*, this high tax rate is due to a high level of unemployment and a poor economy. It’s all they can do to get the money they need to perform their work. Can you imagine running into tax problems there? Is there enough wage levy help to get you out of a hole?
Finland Finland shows up next with a 46.6% marginal rate on their taxes. Finland doesn’t claim high taxes because of a poor economy or high unemployment. In fact, both are doing well in the grand scheme of things. The economy thrives while the unemployment level stays low.
Germany Germany sits in a similar situation at a 45% marginal tax rate. Its economy still ranks high amongst European nations, despite the high tax rate.
It’s difficult to pinpoint one cause for such higher tax rates. For Germany at least it could be to afford social benefits, but any number of factors fits into their story. In contrast, the marginal tax rate for much of the middle class earning $35,000-$80,000 a year (more if you have a family) is 25%. The percentage rises with your income. It climaxes at a max of 39.6% (if you earn more than $400,000 a year), and bottoms out at 10% when you earn under $10,000 or so a year. For more specific numbers, you’ll need to check the most recent marginal tax rates from the IRS. Considering that things could be much worse, 25% doesn’t seem as bad as it used to anymore. To see the other extreme though, check out three of the cheapest tax percentages around the world.
Timor-Leste The tiny country of Timor-Leste close to Indonesia holds a total tax rate of around 0.2%, if you can imagine that. That’s pretty nice right? You give up the strength of government plus the protection of a large nation to live here, but you sure get to keep a large amount of your income. It’s something to gawk over. What are the chances you’d need help with a wage levy? They have to be slim to none as you’d likely never have to worry about one.
Vanuatu Vanuatu is a string of small islands located to the east of Australia that taxes their people a mere 8.4% annually. That’s pretty affordable right? Last up is Maldives, another sting of islands located in the middle of the Indian Ocean. These people sit at just 9.3% on their taxes. So you could have it worse, but you could also have it a lot better. There’s a benefit of being right in the middle though. You get the benefits of a helpful government while not suffering under the burdens of extreme taxes. It may not always seem ideal, since you may need the occasional wage levy help if you fall behind. It is a great country to be a part of though, even if you do need help with a wage levy every now and then. And that’s something to remember every tax season.
Photo credit: Dave Dugdale,