In life, it’s a smart thing to know how other economies operate and how they affect the global economy. Many socialist countries have a higher income tax and as a result provide free health care, free college, etc. Today, we’re going to be going over how much these international countries actually tax and why. Starting with the number one highest tax rate country below:
1. Belgium – 42.0%
Belgium’s economy has been set up as a progressive tax system. Individuals who earn a higher income will pay more in tax. Individuals in the top tax bracket will pay 50% of their income not including social security. As for social security, 13.07% of your income is taxed for that. However, you can still deduct certain business expenses and social contributions from your taxes. All in all, Belgium has the highest income tax in the world!
2. Germany – 39.7%
Also a progressive tax system, Germany taxes individuals 39.7% who are within the top bracket. Capital gains, employment wages, savings/investments, and business ownership are all some of the things that are taxed in this system. Oddly enough, Germany has a church tax of 8% to 9%. However, this is tax deductible. Even though taxes are high, Germany has free tuition. As for healthcare, tax payers are often insured in which a certain percentage of their pay gets taken out and put towards insurance.
3. Denmark – 36.1%
In Denmark, the average individual will pay 45% in tax! Being a progressive system, the most an individual will pay is 55.8%. Some of this breaks down as $155 for social security, 27% or 42% on capital gains, 27% on dividends, 5% for healthcare, and 22.5%-27.8% in municipal tax. Church tax isn’t as high as Germany’s as it lies at .43% to 1.4%. This tax is also voluntary. Like other systems, charitable donations can be a tax deduction.
4. Austria – 34.9%
Austria has an income tax that is relatively high, taxing earners in the top income tax bracket at 34.9%. If you combine this tax with all other tax forms included, tax would get as high as 55%! This 55% can be because of benefits, employer wages, etc. Other tax forms include both capital gains as well as earnings on investments, being taxed 27.5%. As for social security, tax payers pay around 18%. Like other economies, specific work expenses, business expenses, and child expenses can be tax deductible. However, one thing unique to this economy would be the tax credits that are provided. Tax credits are simply money that can be subtracted from your overall tax payments. These credits can be gained because you updated an appliance to a more efficient version or because you reduced your total cost of housing. Whatever the reason, Austria provides these credits based on children, work, and income factors.