A 2015 study reported that 500 of the largest American companies held more than 2 trillion
dollars overseas to escape corporate taxes.
This represents a $600 billion dollars loss in tax revenue for the United States.
But while tax rates are high in the US, around the world they are even higher.
So which countries tax the most?
Well, taxes date as far back as Ancient Egypt, with tax collectors forcing farmers to part
with about 10% of their yield.
Generally, taxation is used to encourage economic growth and increase the government’s budget
for public services.
Most taxes are on individual income, company income, the things you buy, and things that
are imported.
Personal income taxes are by far the largest source of tax revenue for most countries.
In the United States, over 46% of the government’s total revenue is funded by individual citizens.
Corporate taxes contribute much less.
In the US, they account for just 10% of government revenue.
This is partially because many companies move their headquarters to countries with low tax
burdens.
72% of Fortune 500 companies reportedly use these international tax havens instead of
accounting for their income back home.
Taxes on goods and services, property, and imported items make up another smaller percentage
of government revenue.
For personal income tax specifically, European countries with large, socialist-leaning governments
have some of the highest rates in the world.
According to the Organization for Economic Cooperation and Development, Belgium, Germany,
and Denmark make up the most taxed countries.
Each sees about a 40% tax rate for single, childless citizens.
In these countries, the public accepts the high taxes because there are many visible
social programs offered back to the community.
They commonly have some of the lowest poverty rates and highest human development scores.
Denmark has even been ranked the “happiest” country on earth.
In the United States, by comparison, there are far fewer government welfare options and
the income tax averages about 25%.
The total US tax burden is one of the lowest in the developed world.
On the other hand, the United States leads the developed world in CORPORATE income tax
rates at 39.1%.
These tend to be much higher in nations with strong market-based economies which can withstand
a high tax burden.
In developing nations with huge oil exports and expanding economies, taxes can be even
higher.
The United Arab Emirates taxes businesses at a rate of 55%.
However these taxation rates are subject to drastic fluctuations from year to year, as
the economy is generally unstable.
Ultimately, the rates of taxation are dependent on national priorities.
Although many people and companies object to giving up their hard earned money, the
government provides countless benefits to its citizens in social welfare and national
defense.
If you’re curious to learn more about money, wealth, or economies around the world, we’ve
got the playlist for you.
Watch here to learn more.
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