If you pay the highest income tax rate in the UK – 45 per cent – you might think that you are paying one of the highest income tax rates in the world. However, you may be surprised to learn that the residents of 19 countries actually pay a higher ‘marginal’ rate of tax than you.
So, we’ve put together a guide to the ten countries in the world that levy the highest marginal income tax rate. We also look at those countries with the lowest rates. Keep reading to find out more.
The top ten countries with the highest marginal tax rates
One of the most commonly used tools for comparing taxation levels across different countries is the ‘marginal’ tax rate. This is simply the rate on the highest income tax bracket. For example, the UK’s marginal tax rate is 45 per cent and is the highest rate at which income tax is levied in this country.
The ten countries that charge the highest marginal income tax rate (2012 figures) are:
1. Aruba – 59%
2. Sweden – 56.6%
3. Denmark – 55.4%
4= Netherlands – 52%
4= Spain – 52%
6= Austria – 50%
6= Belgium – 50%
6= Japan – 50%
6= Senegal – 50%
10. Finland – 49%
In 2012, Aruba had the world’s highest top marginal rate, 59%, followed by Sweden, 56.6%, and Denmark, 55.4%. The UK was 19th on the list at 45%.
Other major countries have marginal tax rates lower than the UK. The marginal tax rate in the USA is 35% while it is 43% in Italy, 40% in South Africa and just 27.5% in Brazil.
At the other end of the spectrum, besides a handful of countries that do not have personal income taxes, Macedonia, Bulgaria, Albania and Bosnia-Herzegovina all showed the lowest top marginal rate. In these countries the highest rate of income tax is just 10% while it is 12% in Belarus, 13% in Russia and 15% in Hong Kong, Serbia and Lithuania.
What is the marginal tax rate where you live? Do you think the UK’s highest rate of tax is fair compared to other countries? And what do you think about the rates in Aruba, Sweden and Denmark? Share your thoughts below.