There is a battle in Congress about how to fund new programs, the cost of which could rise into the trillions of dollars. Among the ideas put forward was a tax on the country’s 700 billionaire families. (It is not clear who came up with this number.) While that idea failed, it appears that taxes may be increased for people who make over $400,000 a year. Oddly, many of these people claim they are only middle class.
Income taxes in America are fairly new. At one point, both the federal and state governments relied on tariffs.
Americans believe they pay high taxes. However, by the standards of other nations, this is not necessarily true. Some countries charge an additional surtax on their richest taxpayers, sometimes referred to as a “solidarity” charge or contribution, as it is called in Greece and Portugal. Germany tags an extra fee on its wealthiest to fund regional development. Japan has a surtax to help rebuild from the 2011 Fukushima nuclear disaster.
To identify the country with the highest personal income tax rate in 2021, 24/7 Wall St. used multinational accounting firm KPMG data for 142 countries (not including dependent territories). Countries were ranked by the highest marginal tax rate; that is, the highest rate applied (from a certain income threshold).
The United States ranks 41st out of 140 countries, based on the highest marginal national income tax rate, according to KPMG. This puts the highest annual income tax rate on America’s wealthiest between Norway’s and Mexico’s, but considerably lower than some of the highest rates in the world’s other leading economies, including the United Kingdom, France, Germany, Japan and China.
It’s important to recognize that these rates are marginal, meaning the highest taxable income rate only applies to money earned above a threshold. In 2021, that 37% top income tax rate in the United States applied only to annual taxable income above $628,301 for a married couple filing jointly and above $523,600 for single filers.
We used population figures for 2020 from the World Bank World Development Indicators. Some country information came from PricewaterhouseCoopers, a multinational accounting firm. Conversions to dollars are based on mid-November exchange rates. Note that a country’s tax policy and rate can change at any time, and taxes on residents and nonresidents may differ.
The country where the rich are taxed the most is Finland, which has a total population of 5,530,719. The personal income tax rate there in 2021 is 56.95%, the highest marginal tax bracket in the world. The top rate kicks in with an annual income of over €80,500 ($91,154). The rate varies, depending on the municipality of residence. The top marginal individual income tax rate for 2021 includes a state tax of 31.25%, municipal tax of 23.5% and church tax of 2.2%, but it excludes a few smaller taxes.
Click here to see all 25 countries where the rich are taxed the most.
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