Another Top 10-List (Top 20) — Developed Countries Income and Tax Rate

Gross income is not relevant to what you earn.  What counts is after-tax income that actually goes into the bank account.  This varies significantly from one country to another and from one state to others in the U.S.   In 1980, when I moved to New Zealand, the federal tax rate of the country, when you reached $43,500 of gross income, was 68 percent.  Bank cashed revenues count — not gross income.

While many in the U.S. feel we have the best incomes globally – both pre- and post-tax – that is not true.  So who makes the most pre-tax and after-tax income in the developed world.  Who pays the most taxes, and which countries have the greatest effective tax rates?

To answer this, the Organization for Economic Co-Operation and Development (OECD), tracks average gross wage earnings pre-tax and before other deductions such as health insurance and individual retirement contributions. They do include national tax rates and the equivalent social security taxes for 35 countries.

The metrics reported by the OECD include:

  • Gross wage earnings (which decrease due to taxes)
  • Income tax rates
  • Employee social security contributions by individuals (or the equivalent)

Gross wage earnings are reported in U.S. dollars with equal purchasing power.

The following table (1 of 3) shows the OECD countries with the greatest gross income levels –pre-tax income. Prior to the Tax Cut and Job Creation Act of December 2017, the U.S. ranked just 12th best.

The next table shows the OECD ranks based on net-after-tax earnings by country.  These ranks will change post-tax cuts, but prior to that the U.S. was just 10th best.

Tax rates for federal income taxes plus personal national equivalent rates for individual’s social security among the top-20 OECD countries are shown below. Prior to the tax cuts, the U.S. ranked 12th highest in overall federal income taxes plus social taxes (equivalent).

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These data are all prior to the 2017 Tax Cut and Jobs Creation Act – so the summaries on a go-forward basis have already changed.

Taxes do count, however, in the global business landscape.  Thank heavens we do not live in a country like Belgium, with a combined tax level of 40.5 percent for federal income taxes plus social security equivalent versus 26.1 percent in the U.S.



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