Why Is Tax so High in Europe

45% (additional rate) annual income tax above £150,000, 40% (higher rate) between £43,001 and £150,000, 20% (base rate) between £0 and £43,000. There is also a social security levy of between 2% and 13.8% for employees and the self-employed, but capital gains and dividend income are not subject to NI. The first £12,500 is exempt from tax if your annual income is less than £100,000. But all of these countries have much higher excise duties and payroll taxes than we do, which translates into much higher overall sales. Hungary has a flat income tax of 15%, while the US has a progressive federal income tax with a higher marginal tax rate of 37%. Because payroll and excise taxes are low in the United States, the effective marginal rate of 47% is not much higher. In Hungary, on the other hand, both employers and employees pay significant social security contributions. In addition, the country has the highest VAT in the world. The result is an effective tax rate of 57%, 13 places higher than the United States in the ranking of countries. The report describes the number of taxes that high incomes can earn on each additional dollar. Nominally lower income tax rates are not synonymous with lower marginal rates. For example: retirement. Millions of Americans are stuffing as much as possible into their IRAs and 401(k) (which lost 40% of their value during the 2008 economic collapse) because Social Security provides a meagre amount for retirement — only about 33-40 percent of the final salary, which isn`t enough income for a comfortable retirement.

It is also a little more stingy than most other developed countries, with the average pension replacement wage for organisation for Economic Co-operation and Development (OECD) member countries being 57% and 62% in the European Union. Of course, a higher replacement wage better ensures that older people don`t experience a sharp drop in their standard of living, and for Americans to live up to that, we need to save a lot more out of our own pockets. As capital flight (people move due to high tax rates) increases and interest in investment and entrepreneurship declines, the question remains: who will pay for the programs promised by Elizabeth Warren and Bernie Sanders? For incomes between £100,000 and £125,000, workers pay tax 40% higher + elimination of the tax-free personal allowance + 2% NI Look at the high-tax country, which according to the World Economic Forum has the fourth most competitive economy in the world ahead of the United States. In exchange for paying their taxes, Swedes have access to a generous support system for families and individuals that most Americans can only dream of. This includes not only high-quality health care, but also childcare services, a more generous old-age pension, low-cost higher education (most Swedish universities do not charge tuition fees), retraining, paid sick leave, paid parental leave (after a birth or to care for sick children), adequate time off, affordable housing, elder care and much more. To receive the same level of benefits as Sweden, Americans will have to spend much more on direct payments on top of our taxes. These payments often come in the form of fees, supplements, higher tuition fees, insurance premiums, co-payments, and other hidden fees. Whether it`s in the form of a tax, fee, or surcharge, one way or another, it comes out of your pocket. However, this more complete picture is not taken into account in the calculation of who pays the most.

Is the Swedish tax rate of 76% the ultimate goal of the Democratic candidates? If this is the case, they should proceed with caution. The EPICENTER report describes the conflict between the efficiency and fairness of tax systems and explains how high marginal tax rates can have a long-term impact on career choices and migration decisions, and reduce returns on education and entrepreneurship. I think most people know that European countries have much more generous welfare states than the United States and that they achieve this by having much higher taxes. That`s why the EPICENTER report, which compares the highest tax rates on labour income in 41 OECD (Office for Economic Co-operation and Development) and EU countries, is so interesting. For example, the report looks at social security contributions such as health care and pensions, which are linked to previous income. .