The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Taxes Around the World
Did you know that Belgium has the highest income tax rate in the world at over forty-two percent? This calculation is based on a single person on an average salary with no children, according to statistic website Statista. Germany is second highest with a rate of over thirty-nine percent, followed by Denmark at over thirty-eight percent.
As a result, secret tax jurisdictions have become more prevalent. Twenty-one trillion US dollars to thirty-two trillion US dollars is the current estimated value of private financial wealth that is located, untaxed or lightly taxed, in secrecy jurisdictions around the globe. According to the Financial Secrecy Index, the USA accounts for more than twenty-two percent of global financial services exports. This is more than any other country in the world. Interestingly, nineteen of the states that appear on the Financial Secrecy List are British overseas territories and British Commonwealth territories.
The Financial Secrecy Index ranks the world’s largest tax havens, based on two factors. These consist of the financial secrecy score of a particular territory and its share of the global market for offshore financial services. The top tax haven in the world is unsurprisingly Switzerland, while Luxembourg and Hong Kong follow in second and third place respectively.
In the USA, there is a considerable gap in income taxes between the wealthy and the poor. For example, American’s with adjusted gross incomes of two-hundred and fifty-thousand dollars or more, pay almost half of all individual income taxes in the USA, but they account for not even three percent of all income tax returns filed.
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Tax Rates Around the World
“The hardest thing to understand in the world is the income tax.” – Albert Einstein
Top 10 Countries with the Highest Income Tax Rate
- Belgium 42.8%
- Germany 39.9%
- Denmark 38.9%
- Hungary 35%
- Austria 34%
- Greece 25.4%
- UK 24.9%
- USA 22.7%
- New Zealand 16.4%
- Israel 15.5%
Note on statistics: based on a single person on an average salary with no children
Financial Secrecy + Secret Tax Jurisdictions
$21 to $32 Trillion Dollars
estimated value of private financial wealth that is located, untaxed, or lightly taxed, in secrecy jurisdictions around the world.
USA has the Largest Global Scale Weight
It accounts for a 22.6% share of global financial services exports, more than any other state in the world.
British Territories Appear Frequently
19 of the states that appear on the Financial Secrecy List are British overseas territories and British Commonwealth territories.
Samoa is the Most Secretive State
This includes banking secrecy and company ownership records, but it only accounts for less than 1% of the global market for offshore financial services.
$1 to $1.6 Trillion Dollars
The annual estimate value of illicit cross-border financial flows.
Top 10 Tax Havens in the World
- Hong Kong
- Cayman Islands
Note on statistics: based on the Financial Secrecy Index which ranks the world’s largest tax havens, based on two factors – a territory’s financial secrecy score and its share of the global market for offshore financial services.
USA Spotlight on Income Tax: Rich vs. Poor
People with adjusted gross incomes of $250,000+ paid nearly ½ of all individual income taxes, but they accounted for only 2.4% of all income tax returns filed.
Their average tax rate was 25.6%.
People with incomes less than $50,000 accounted for 63.4% of all individual income tax returns filed, but they paid 6.2% of total taxes.
Their average tax rate was 4.2%.