Thanks to the new Republican tax plan, tax rates in the US are set to decrease for many this year. But how do US tax rates compare to those of other countries? It turns out that they are actually quite low. Economists classify the US as a relatively lightly taxed country, and it ranks 32nd in total tax burden out of 35 countries OECD countries. This is partly because while the US has higher taxes on business and property, it has low taxes on personal income, which drives down its total tax burden. Nevertheless, there are a number of countries that pay less in tax than the US. Let’s take a look.
- Chile – Chile, an OECD member state, has a progressive tax system. The highest tax bracket for personal income is 35 percent, which isn’t much higher than the highest bracket in the US. However, the lowest bracket is 0 percent, meaning the poorest Chileans don’t have any personal income tax responsibilities. By comparison, the lowest tax bracket in the US is 10 percent.
- Canada – Believe it or not, citizens of the US’s neighbor to the north pay less in taxes than their American counterparts. Canada’s highest personal income tax bracket is a full 7 percentage points lower than the highest bracket in America (although the lowest bracket is 15 percent, 5 percent higher than America’s 10 percent).
- Hungary – Hungary not only has one of the lowest corporate tax rates in the world (about a quarter of the US’s corporate tax rate), but it also has one of the lowest rates of tax on personal income. That makes this eastern European nation one of the lowest tax jurisdictions around.
- Singapore – Singapore is widely regarded as one of the world’s most tax-friendly jurisdictions and is often labeled a tax haven. It has an individual tax rate of 22 percent and a corporate tax rate of 17 percent.
The bottom line? The US is far from one of the most heavily taxed jurisdictions. A number of countries worldwide – including countries like Denmark, Norway, and Sweden – levy significantly higher taxes than the US. However, in spite of being a relatively lightly taxed country, there are still a number of countries that have lower tax rates than the US, both in terms of corporate tax rates and personal income tax rates.
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