These Are The Countries With The Highest Income Tax Rates

Unsustainable debt, monetary inflation, uneasy markets, quantitative easing -- the health of the global economy is on everyone’s mind.

Why? Because when coupled with massive amounts of public debt, weak economies usually lead to one thing: tax increases.

And it's happening right now.

Just look at the eurozone where, desperate to address increasing deficits, several countries in the 17-nation union have increased personal income tax rates.

“Spain, for example, raised its personal tax rate by 2 percentage points to 45 percent last year and France’s newly elected Socialist Party is also proposing hiking taxes on the rich,” CNBC reports.

“Hike,” however, may be too kind a word. France's newly-elected Socialist François Hollande wants to impose a 75 percent income tax on citizens earning more than $1.3 million. That's a bit more than a “hike.” That's an “ultra increase.”

Meanwhile, on the other side of the Atlantic, many Blaze readers are well aware of the political war being waged over tax increases.

The current strategy of President Barack Obama and Congressional Democrats can be summed up in two words: “Buffett Rule.” GOP opposition to the proposed tax increases can also be summed up with two words: “no way.”

However, although the current top tax rate in the U.S. is a whopping 35 percent, take comfort in knowing there are several countries with higher rates.

“In fact, the U.S. is ranked 23rd in terms of the top marginal tax rate among 96 countries surveyed by KPMG in 2011,” CNBC reports.

All we’re trying to say is things could be worse (we know that’s not very comforting, but it’s all we got).

Here are the countries with the highest income tax rates [block quotes from CNBC, data KPMG]:

10. Ireland

Highest income tax rate: 48 percent

Average 2010 income: $50,400 

Ireland’s tax rate of 48 percent is much higher than the 40 percent average in Northern Europe. In fact, Northern Europe is the region with the world's second-highest personal income tax rates, according to KPMG.

The Irish government, which has been trying to bridge a big fiscal gap after the financial crisis, raised the top rate by one percentage point for a third-consecutive year in 2011.

The country’s top marginal rate kicks in at about $43,900 of taxable income. Citizens also have to pay an additional social security tax of 4 percent. The government increased tax rates that apply to gifts and inheritances as well as capital gains from 25 percent to 30 percent in December. While income taxes are high, the country has among the lowest corporate tax rates in Europe of just 12.5 percent.

9. Finland

Highest income tax rate: 49.2 percent

Average 2010 income: $49,000

Finland’s current marginal rate of 49.2 percent comes into effect at $91,000. The country has been reducing its top marginal rate from 53.5 percent in 2004 to put more money into the pockets of households in order to fight the effects of inflation.

Municipal tax rates are also significant in Finland — varying between 16.25 percent and 21.5 percent. If an individual belongs to a Finnish church, then a church tax of 1 percent to 2 percent may also be due. Workers have to pay additional social security taxes like unemployment and pension insurance premiums. Other taxes include property tax, gift tax and tax on interest as well as a capital gains tax of 28 percent.

[...]

The government announced plans in March to increase revenues by $1.98 billion via tax hikes by 2015. The measures include income tax hikes for high-earners with annual incomes or pensions of more than $132,000, as well as those with inheritances in excess of $1.3 million.

8. (Tied) United Kingdom

Highest income tax rate: 50 percent

Average 2010 income: $52,320

The U.K. increased its highest tax rate by 10 percentage points in 2010 to 50 percent, joining the ranks of only three other countries with such a high marginal rate. In March, the government backtracked and cut the tax band for the highest earners to 45 percent, effective from April 2013.

As part of the reforms, the government also raised the income tax threshold to $14,300, taking more poorly paid people out of the tax net, while introducing a new stamp duty of 7 percent on the sale of property worth more than $3.24 million.

Britain’s top marginal tax rate kicks in at an income of $231,000. Although 50 percent is the current top rate of tax, the phasing out of personal allowances on income over $160,000 can result in a marginal tax rate of 60 percent. Workers have to pay a social security tax of 12 percent, which rises 2 percent on earnings above $1,259 per week. The country’s capital gains tax also ranges from 18 percent to 28 percent.

7. (Tied) Japan

Highest income tax rate: 50 percent

Average 2010 income: $53,200

Japan is the only Asian country to make the list of the top 10. Its top tax rate of 50 percent is more than double Asia’s average rate of 23 percent.

The country’s highest income tax rate is broken into two parts with a marginal rate of 40 percent, which comes into effect at around $217,000, plus an additional 10 percent municipal tax. Social security taxes range from 0.6 percent for employment insurance to 5 percent for health insurance capped at $700 a month. With Japan’s rapidly aging society, those 40 and over are also required to pay a nursing care insurance of 0.8 percent, capped at $110 a month. Other notable taxes include capital gains for stock transactions at 20 percent.

Japan’s tax revenue is the fifth lowest among OECD [Organization for Economic Co-operation and Development] members, and the country has been dealing with its growing debt problems...In 2011, the tax burden for all Japanese families increased due to higher employee and employer social security contributions and a cut in tax allowances related to children...

6. (Tied) Belgium

Highest income tax rate: 50 percent 

Average 2010 income: $52,700

Belgium’s highest tax rate of 50 percent is 5 percentage points higher than the average for Western Europe, which has the highest personal tax rates of any region globally.

The highest marginal tax rate kicks in at $46,900 of income. The country’s employee social security rate is 13 percent with employer contributions at 35 percent. Municipal taxes can be up to 11 percent of income, while nonresidents pay a fixed 7 percent rate. Capital gains tax is either 16.5 percent or 33 percent, though taxpayers can get some exemptions. For expatriates, if an executive travels 25 percent of their time on business, then the top marginal tax rate can be reduced to 40 percent of income.

Belgians have the highest tax and social security burden, according to a recent OECD study. In 2011, single taxpayers with an average income took home less than 45 percent of what they cost their employer. Taxpayers at higher earnings took home less than 40 percent.

5. (Tied) Austria

Highest income tax rate: 50 percent

Average 2010 income: $50,700 

Austria...levies a high income tax and social security burden on households.

Its highest marginal tax rate comes into effect at $80,000 of taxable income. The country’s social security rate ranges from 17 percent to 18 percent. Special payments for workers like a holiday bonus are also taxed at 6 percent, up to a limit of one-sixth of the annual income. Annual property tax is levied by municipalities at a rate of 0.5 percent to 1 percent of the property’s value. Other notable taxes include a capital gains tax of 25 percent.

In April, the Austrian government nailed down a crucial deal with Switzerland to tax money stashed away by its citizens in secret Swiss bank accounts. The existing funds will be taxed between 15 percent to 38 percent based on the size of the deposits and is expected to bring in $1.3 billion in revenue starting in 2013. The government estimates about $12 billion to $20 billion in undeclared funds are parked in Swiss accounts.

Click here to see the rest of the countries with high income tax rates.

Front page photo source: Quantum Marketing. Carousel image courtesy of Shutterstock.com.

This story has been updated.