Thursday, October 31, 2019
Tax Foundation, Taxing High Incomes: A Comparison of 41 Countries:
- This report compares top effective marginal tax rates on labour income in 41 OECD and EU countries.
- The top effective marginal tax rate is the total tax paid on the last dollar earned by a high-earning worker, taking social security contributions and consumption taxes into account in addition to income taxes. It is a measure of the degree of progressivity and redistribution in the tax system. As such, it is of great policy interest.
- The highest marginal tax rate is found in Sweden, 76 percent, and the lowest in Bulgaria, 29 percent.
- In general, the Nordic and the Western European countries have the highest effective tax rates.
Top Effective Marginal Tax Rates in 2019 and Their Composition
Despite their policy importance, data on effective marginal tax rates is not readily available, since they are complicated to research and compute. To our knowledge, this is the only recent comprehensive compilation of top effective marginal tax rates in advanced economies. Combining data mainly from international accounting firms, the OECD, and the European Commission, we are able to calculate marginal tax rates in the 41 members of the OECD and/or EU. The methodology is described below.