Right off the bat, let us talk about what a personal income tax is. This is practically the tax paid based on one’s personal income or one’s earnings.
Americans have been complaining about how high the personal income tax rate in the US is.
Although taxable income falls in different brackets, Americans pay from 10 percent to 37 percent tax rates.
Although high, this isn’t actually the highest in the world and US only ranks seventh when it comes to the highest personal income taxes.
And surprisingly people in countries that pay higher taxes are some of the happiest and more content because apparently, high taxes equal to a high level of liveability and higher quality of living.
Which are the countries that levy the highest personal income tax in the world:
Denmark
On top of the list is Denmark. Denmark’s Personal Income Tax stands at a whooping 55.80 percent. But that isn’t even the highest tax rate Danish have paid. From 1995 to 2018, Denmark’s average income tax rate is 60.45 percent.
The personal income taxes are collected from individuals. The Danish follows a progressive tax system, which means that the more you earn, the more taxes you pay.
That income tax rate would have people screaming bloody murder. However, the Danish people, based on surveys and studies are some of the happiest people in the world, despite and in spite of having to pay an insurmountable amount of income tax.
According to studies, nine out of 10 Danish people are happy to pay their taxes.
The Danish people have this notion that they are not paying taxes. Rather, they are paying for quality of life.
Denmark provides several high-level welfare program and social benefits to its citizens so high that they’d feel bad complaining about paying taxes because things that could cause worry to a lot of people whichever country they are in: education, health-care, are all taken care for. As they say, this is where all those tax dollars in Denmark go.
For one, education in Denmark is free. And we aren’t talking about the primary education for elementary and high school. Denmark also offers free college education. Each student is also given a monthly stipend from the government. This means that every single Danish person do not have to worry about the cost of education for their children.
Health care in Denmark is also top-of-the-line. It is also free for everyone.
Sweden
Second on the list is Sweden.
Sweden has an average 48.2 percent in income tax rates.
It can be as low as 29 percent and as high as 60 percent.
But, just like Denmark, people are all too willing to pay these taxes owing to the fact that it is considered one of more successful societies.
You do not hear complaints from Swedish people about paying high-income taxes because they get the value for their money.
Based on research, the Swedish people have a high trust rating for their government. They believe the government can manage their taxes well and that it will trickle down on it constituents.
School rates are very affordable for the locals that they can send their kids to have a quality education, which costs 10 times less than what the British are paying for.
They have the universal kindergarten coverage, free primary education, free health care, which includes dental and even have child allowance.
Parental leaves last up to 480 days. And for 390 of these days, they will still receive 80 percent of their income.
The pension system for Sweden is also impressive. Although it follows a progressive standard with those earning more getting higher pensions, those who did not work enough are still guaranteed for state pension.
Finland
Completing the podium finishers for countries with the highest income tax is Finland.
The personal income tax rates for Finland stands at 51.60 percent. Its highest rate was in 1995 when it reached 62.20 percent. And a record low of 49 percent in 2010.
Being a welfare state, the Finns believe that collecting taxes and levying high taxes from its constituents are important in order to maintain the standard of living. They say the Finns are living stress-free lives as they no longer need to stress over basic needs because thanks to their income tax, the government has got their backs.
Finns are believed to be a happy people and they are giving a lot of credit on the welfare the government gives.
Let’s start even before childbirth.
When you are pregnant, the government sort of throws you a baby shower, sending you a care package. And we kid you not. They get diapers, baby blakies, baby clothes. You can even switch this for cash.
Maternity leave is mandatory in Finland. Scratch that, four months of PAID maternity leave. Both parents can even share a parental leave that’s good for six months.
They can also opt for government-owned daycare centers, which, by the way, have licensed child care providers.
And as part of its extensive health-care, the government can reimburse you for wages lost when your were sick or parents can make use of their Special Care Allowance if you were absent because you were taking care of your sick kid.
Schools are, of course, free. Kids are happier because they don’t subject students to standardized testing and school hours are shorter than the rest of the world.
Canada
The 4th is Canada with a personal income tax rate of 33 percent.
In Canada, the income taxes its residents pay form the bulk of the government’s revenues.
In 2018, Canada collected more revenues from income tax than corporate income tax.
Although part of the income tax goes to social welfare programs, the bulk of what is used for welfare comes from sin taxes.
Australia
This country down under is on Top 5 in our list having levied a high income tax from its residents.
Taxes are based on one’s income or it is progressive with those earning more required to pay more taxes. Those at the top of the income ladder could pay as much as 41.58 percent but a low of 0 percent.
On top of the income tax residents and non-resident tax payers have to pay, they are also required to pay the Medicare levy at two percent.
Medicare is Australia’s universal health care system and is the major health-care provider for citizens and permanent residents.
Italy
Italians live the high life or live to pay some of the world’s highest income tax.
At sixth place, Italians are made to pay taxes at a progressive rate of 23 percent to 43 percent.
Tax system in Italy is complex with many sub-categories. Basically, however, residents and non-residents are required by the government to pay income taxes based on personal capacity.
Aside from income tax, there are other taxes you have to pay for other taxes like the regional tax and the municipal taxes.
Bonuses are also subject to corresponding taxes.
USA
The America did not even break into the Top 5 but still made it to Top 7. With a progressive tax system, the USA levies an income tax rate of 37percent for the highest earners and 10 percent for those who belong to the lower bracket.
Like every single country, the taxes are used to pay for various public services like social security that provides benefits like retirement and benefit for spouses and children of retired workers, it also gives aid for disabled workers. It is also used for medical benefits and for national defense or the military among others.
Germany
Every single euros you earn in Germany is subject to taxes. With a progressive system, the income tax rate go as high as 45 percent and as low as zero percent.
Norway
This Nordic country in Northwestern Europe levies a 38.52 percent tax rate for income.
If we take the average rate of income tax from 1995 to 2018, it will have reached 41.79 percent. The highest in history for Norway is 47.50 in 2000.
The UK
The United Kingdom’s highest tax rate is 45 percent for and although the rate differs every year, the rates are dependent on how much of your income is above the personal allowance and how much income falls within each tax band
A personal allowance is another term for the threshold above, which income taxes are based on.
The good thing about the UK tax system is if you are earning less than your own personal allowance in taxable income in a tax year, then you may not pay any income tax at all.
So while it goes as high a 45 per cent, the lowest in the income bracket, do not have to pay taxes.
France
In France, the income tax rates for the top earners is at 45 percent. Those in the lower bracket pay a 14 percent tax rate.
Income tax is levied on several aspects. Aside from income from employment, taxes are also levied for income from pension, rental and investment.
High earners pay an additional tax called ‘high income.’
Netherlands
The Netherlands is very considerate of its taxpayers. While those who earn more money actually pay a substantial amount of taxes, one’s personal situation may affect the amount that you pay in taxes. These situations may include marital status, type of work and residency status.
Those who earn more naturally pay more and the income tax rate goes as high as 52 percent.
