Think Your Taxes Are High? The 5 Countries With the Highest Taxes

Eric Bleeker, CFA, The Motley Fool
Updated

Tomorrow's D-Day for tax filers across the United Sates. While its easy to bemoan your tax rate, especially if you owe money to Uncle Sam, the United States actually has a relatively low personal tax rate compared with other countries.

Last October, accounting firm KPMG put together a study of the countries with the world's highest tax rates on personal income. Not surprisingly, Europe was among the most-taxed regions. Western Europe led all world regions with a 46.1% tax rate on personal incomes. By contrast, North America stood at 27.7%.

Also, while the top income-tax bracket for America is jumping to 39.6% this year, it stands neck-and-neck with Spain for having the world's highest income level where the highest rate of taxes takes effect.


Clearly, taxes are a matter of significant controversy. Not only do tax codes and deductions vary wildly by country, but the services a citizen receives for his or her tax dollars also differ. Services are difficult to measure in an objective manner, but KPMG tried looking beyond purely top tax rates by measuring effective taxes for people who earn both $100,000 and $300,000 per year.

Let's look which countries' citizens had the highest tax burden in 2012, and how they compare with the United States.

1. Belgium

  • 2012 top rate of income taxes: 50%

  • Effective tax rate on $100,000: 47% (13.1% Social Security, 33.9% income tax)

  • World rank on effective tax rate of $100,000: 1

  • Effective tax rate on $300,000: 53.4% (13.1% Social Security, 40.3% income tax)

  • World rank on effective tax rate of $300,000: 2

2. Italy

  • 2012 top rate of income taxes: 43%

  • Effective tax rate on $100,000: 45.2% (9.6% Social Security, 35.6% income tax)

  • World rank on effective tax rate of $100,000: 4

  • Effective tax rate on $300,000: 51.8% (10% Social Security, 41.8% income tax)

  • World rank on effective tax rate of $300,000: 3

3. France

  • 2012 top rate of income taxes: 45%

  • Effective tax rate on $100,000: 42% (22% Social Security, 20% income tax)

  • World rank on effective tax rate of $100,000: 8

  • Effective tax rate on $300,000: 54% (20% Social Security, 34% income tax)

  • World rank on effective tax rate of $300,000: 1

4. Denmark

  • 2012 top rate of income taxes: 55.4%

  • Effective tax rate on $100,000: 42.3% (0.2% Social Security, 42.1% income tax)

  • World rank on effective tax rate of $100,000: 6

  • Effective tax rate on $300,000: 51.5% (0.1% Social Security, 51.4% income tax)

  • World rank on effective tax tate of $300,000: 4

5. Greece

  • 2012 top rate of income taxes: 45%

  • Effective tax rate on $100,000: 46.5% (16.5% Social Security, 30% income tax)

  • World rank on effective tax rate of $100,000: 2

  • Effective tax rate on $300,000: 45.1% (5.6% Social Security, 39.5% income tax)

  • World rank on effective tax rate of $300,000: 14

For comparison: The United States

  • 2012 top rate of income taxes: 35% (rising to 39.6% in 2013)

  • Effective tax rate on $100,000: 26% (7.3% Social Security, 18.7% income tax)

  • World rank on effective tax rate of $100,000: 55

  • Effective tax rate on $300,000: 30.5% (3.7% Social Security, 26.8% income tax)

  • World rank on effective tax rate of $300,000: 53

It could be worse
While Denmark makes this list as one of the highest-taxed countries, it also routinely scores rankings as the "world's happiest country" and ranks amazingly well in areas such as regulatory efficiency. Also bear in mind that income-tax rankings don't fully account for areas such as VATs and sales taxes, as well as payroll taxes levied on employers that can act as hidden taxes reducing income.

Yet if you're a last-minute filer bemoaning your tax burden in 2012, just remember: If you live in America, it could be worse.

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