Lauren Sharsta http://www.accounting-degree.org 4m 946 #taxes

The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.

Taxes Throughout the World

If you have not already done so, the deadline for filing federal tax returns is today. Some of you owe money, while others will receive their return. Give a lot, get a little. On another note, the United States is not the only one responsible for paying taxes. Taxes exist worldwide and are collected by nearly every government around the world from its citizens. Taxes are an inevitable part of life and are collected in nearly every country on every continent around the world.

The origin of taxes began as far back as written records existed in 2500 BC to 3500 BC in Ancient Sumeria, and probably before anything was ever recorded, often requiring citizens who lived in communities to contribute their goods or services, more specifically, their time, to the common good. Sumerians likely raised crops for food and provided warrior skills to protect the community. The ruler or governing body of the community may have written it in the law that all citizens who wished to be a part of the community would have to contribute in some way, and in return, the government would protect its citizens and use the services or payment from its citizens for its citizens to advance and protect the society as a whole.

Babylon, Mesopotamia, Egypt, Greece, Persia, Rome, and many other civilizations would follow those same procedures, expanding their empires, and developing currency systems which required its citizens and even those who were defeated later on and adapted into the society to pay into the tax system. Not only did governments collect taxes, but many religious organizations, specifically the Catholic Church also imposed a tax on its followers and members.

Taxes were always meant for the common good and allowed for these institutions and government systems to obtain the money, or goods, that were required in order to function. These taxes pay the people who run the government system and those who trickle down into the system to live and provide the services back to the society that it needs in order to operate.

In modern day, nearly all governments on all continents collect some form of tax from its people. Taxes are still implemented and play an important role to support the entire societal system. A society without government may fall very quickly, while a a government without society has no reason for existing. A government without money to protect and provide for its people cannot exist, while people without money cannot have a functioning government. It is the tax placed upon the society, which helps the government function properly, in order to provide the proper services for the society, in order to keep the society functioning properly and accordingly.

This is a fairly accurate representation of what the IRS does to your bank account when you owe:

Infographic from Lauren Sharsta, summary article by Matthew Gates

Click to open / Right-click for save options

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Taxes Around the World

For many Americans, their least favorite time of the year is tax season. But Americans actually pay lower income tax rates than people in many other countries. Let’s take a look at income tax rates around the world, including some countries that don’t collect any income tax at all.

Taxes Here at Home

In the U.S., the wealthiest 10 percent pay 25 percent of all payroll taxes. (1)

82%

Percentage of Americans who pay payroll or income taxes. The remaining 18 percent includes the elderly and those with annual incomes under $20,000.

1.6 million

New tax filers in the U.S., from 2010 to 2011 (2)

Average individual income tax rate by year (2)

1979: 11%

1980: 11.6%

1981: 11.9%

1982: 11%

1983: 10.2%

1984: 10%

1985: 10.1%

1986: 10.3%

1987: 10.2%

1988: 10.3%

1989: 10.1%

1990: 10%

1991: 9.8%

1992: 9.8%

1993: 9.9%

1994: 9.9%

1995: 10.1%

1996: 10.5%

1997: 10.9%

1998: 10.9%

1999: 11.3%

2000: 11.7%

2001: 10.2%

2002: 9.5%

2003: 8.3%

2004: 8.5%

2005: 8.8%

2006: 8.9%

2007: 9.2%

2008: 7.8%

2009: 7.2%

2010: 7.7%

2011: 8.4%

How They Compare

Tax rates vary dramatically by country. Let’s take a look at how some of them compare.

Highest top personal marginal income tax rate (most recent years available) (2, 3)

Denmark: 60.4%

Sweden: 56.7%

Portugal: 56.5%

France: 54.5%

Belgium: 53.7%

Netherlands: 52%

Spain: 52%

Finland: 51.1%

Japan: 50.8%

Austria: 50%

Israel: 50%

Slovenia: 50%

Canada: 49.5%

Italy: 48.6%

Ireland: 48%

Germany: 47.5%

Australia: 46.5%

United States: 46.3%

Iceland: 46.2%

Greece: 46%

United Kingdom: 45%

Luxembourg: 43.6%

Lowest top personal marginal income tax rate (most recent years available) (4, 5)

Latvia: 23%

Estonia: 21%

Armenia: 20%

Pakistan: 20%

Singapore: 20%

Slovakia: 19%

Hungary: 16%

Romania: 16%

Costa Rica: 15%

Czech Republic: 15%

Lithuania: 15%

Mauritius: 15%

Serbia and Montenegro: 15%

Ukraine: 15%

Russia: 13%

Bulgaria: 10%

Cote d’Ivoire: 10%

Kazakhstan: 10%

Paraguay: 10%

Countries Without Income Tax

A handful of nations don’t levy any personal income tax. Which countries are income-tax-free, and how do they fund their governments? (4)

United Arab Emirates

Boasting one of the world’s highest per-capita incomes ($49,000), the UAE has no personal income or capital gains taxes. But that doesn’t mean the country is tax-free.

55%

Maximum corporate tax rate

30%

Country’s GDP based directly on oil and gas production

5%

Monthly earnings go toward UAE social security system

30%

Sales tax on alcohol

Qatar

The world’s richest country (per-capita GDP of $100,000+), Qatar relies heavily on its natural resources, particularly natural gas.

35%

Tax rate levied on business involved in oil and gas operations

0%

Taxes on personal incomes, dividends, royalties, profits, capital gains and property

5%

Tax on imported goods

Cayman Islands

Known primarily as a tax haven for the wealthy, the Cayman Islands are popular among the 1 percent thanks to the lack of taxes on personal income and capital gains. The country also does not mandate social security contributions.

25%

Maximum fee on imports

50%

Ratio of foreign workers in islands’ workforce

Bahrain

Another oil-rich nation, Bahrain relies on the Abu Safa oilfield, which it shares with Saudi Arabia.

70% of Bahrain’s budget revenue comes from the Abu Safa oilfield.

7%

Contributions to social security by employees

10%

Municipal tax levied on expats who rent homes in Bahrain

The Bahamas

The Caribbean nation’s economy is heavily dependent on tourism and offshore banking.

70%

Government revenue that comes from duties on imports

3.9%

Employees’ mandatory social security contributions

Source: http://www.accounting-degree.org/taxes-around-the-world/

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