As the saying goes, there are only two sure things in life: Death and Taxes. No matter where you live (unless you own a country), you're going to be saddled with tax at some point. Much airtime and column inches are given over to grumbling about tax rates in the U.S., but, as you're about to find out, it could be worse… a lot worse. The top federal tax rate in America tops out at 35%. More than a few countries log in at 50% and above. Can you imagine Uncle Sam taking 50% or more of your income every year?
Over the last few years, Europe has been forced to raise taxes due to their debt crisis, can the U.S. be far behind? Spain raised its tax rate by 2 percent last year, bringing their national tax rate to 45%. At this point in time, the U.S. is ranked 23rd out of 96 countries in terms of the top tax rate paid in the country.
Politicians and pundits have plenty of ideas on how to ease the U.S.'s debt through higher taxes, mostly on the rich. In fact President Obama is a proponent of the Buffet rule, which would ensure that people earning more than $1 million per year pay more in taxes proportionally than middle-class families. It should be taken into consideration that many of the countries with what feel like oppressive tax rates to Americans have socialized, national health care. So that's a bonus, right? Let's take a look at the 10 countries with the highest tax rates:
Highest income tax rate: 48%
Average 2010 income: $50,400
Ireland's 48% tax rate far outpaces the 40% average tax rate in Northern Europe, and that's saying something, as Northern Europe as a region has the world's second-highest personal income tax rates. Ireland has been grappling with a financial crisis and a huge gap between the rich and the poor, leading the government to raise the top tax rate by 1% three consecutive years in a row from 2008-2011. To be beholden to the top Irish tax rate, you need to be making just $43,900 of taxable income.
Highest income tax rate: 49.2%
Average 2010 income: $49,000
If you live in Finland and make $91,000, you are paying 49.2% in taxes. But, it could be worse—in 2004 Finland's top tax rate was 53.5%. The Finnish government has been reducing the top tax rate to put more money into the wallets of citizens so they can fight the inflation the country is experiencing economically.
8. United Kingdom
Highest income tax rate: 45%
Average 2010 income: $52,320
Until very recently the UK's top tax rate checked in at a painful 50%, but in order to be required to pay that, you'd have to be making $231,000 or more. To make matters worse, the gradual end of personal allowances on income over$160,000 effectively drives the tax rate to 60%. The UK raised its highest tax rate by a whopping 10% in 2010 to arrive at 50%.
In March, the government acquiesced a bit and cut taxes for the highest income to 45% effective April 2013.
There is a three-way tie for 5th, but it is dubious honor, especially for those bearing the burden of this particular tax rate.
5. (Tied) Japan
Highest income tax rate: 50%
Average 2010 income: $53,200
Japan is the only Asian country to make the top 10 highest tax rates list. In fact, with a tax rate of 50%, Japan is more than double the Asian's average tax rate of 23%. The country's highest income tax rate is broken into two parts with a rate of 40%, which comes into effect at around $217,000, plus an additional 10% municipal tax.
5. (Tied) Belgium
Highest income tax rate: 50%
Average 2010 income: $52,700
Belgium's highest tax rate kicks in at $46,900 of income, which seems pretty oppressive. A 50% tax rate at that income brings residents' take home pay down to $23,450. Belgium's rate is 5% higher than the average for Western Europe, which already has the highest personal tax rates globally.
5. (Tied) Austria
Highest income tax rate: 50%
Average 2010 income: $50,700
Austria is often lauded as one of the best places in the world to live, but that comes at a cost. The 50% tax rate kicks in at $80,000 in income. Couple that with high social security taxes of 17-18%, and Austria's tax burden is crushing. Austria even taxes citizens money when it is stashed in Swiss bank accounts. Those funds are taxed between 15% to 38% depending on the size of the account.
Highest income tax rate: 52%
Average 2010 income: $57,000
Holland's highest tax rate is 52%, significantly higher than Western Europe's 45.7% average. The top tax rate kicks in at $74,500 of taxable income.
Highest income tax rate: 55.4%
Average 2010 income: $64,000
Denmark's top rate of 55.4% is actually a bit of a bargain to residents. In 2008, they paid 62.3%. The tax cut was made to boost the Danish economy. That is all well and good, but Denmark still has the third-highest income tax in the world. That 55.4% tax rate hits you at $76,000 in taxable income.
Highest income tax rate: 56.6%
Average 2010 income: $48,800
With the highest tax rate in the country of 56.6%, Sweden comes in as the second-highest tax rate in the world. In fact, Sweden is one of eight countries in Europe to make the list of countries with the highest income taxes in the world. Sweden also has the highest tax rate in Scandinavia. Sweden's top tax rate affects people making $81,000 or more. These taxes fund a generous social security program as Sweden spends more of its GDP on social services than any other country in the world. Swedes receive free education and subsidized healthcare and public transport, along with a basic pension guaranteed by the government.
Highest income tax rate: 58.95%
Average 2010 income: $21,475
Aruba has the highest income tax rate in the world. It is also the only country in the Americas to make the top 10 list. It is a Dutch nation. The top tax rate of 58.95% is down from the 60% it was prior to 2007. The top tax rate in Aruba kicks in at $165,000 in income. Married tax payers have a lower maximum rate of 55.85 percent, compared with single taxpayers at 58.95 percent. Aruba is considered to have one of the highest living standards in the Caribbean. The small island's exceptionally high tax rate is also much higher than the Caribbean average of 26.7 percent. The Bahamas, Bermuda and Cayman Islands have no personal income taxes.