World-Wide Marginal Tax Rates

How does the U.S. Tax Rate compare with other countries?

Recently the people at Turbo-Tax created a great “info-graphic” comparing world-wide marginal income tax rates so we can see where we stand.

According to Wikipedia

A marginal tax rate is the tax rate that applies to the last unit of currency of the tax base (taxable income or spending)

In other words the marginal tax rate is the rate you will pay on the next dollar you earn. It doesn’t include other taxes like state taxes, sales taxes, property taxes etc. Based on this chart the U.S. compares pretty favorably on a tax rate basis when compared to other developed countries.

Interestingly if you click on an individual country, the chart from TurboTax (above)  also includes check boxes to indicate whether a country has universal health care and “paid maternity leave”.  Obviously they mean “universal paid maternity leave” because a great many companies in the U.S. have paid maternity leave benefits but the table says the U.S. doesn’t have “paid maternity leave”. But the chart looked interesting, so I thought I’d do a bit of a comparison and so I created the following table.

I looked for relatively developed countries in order to compare their tax rates to ours. Interestingly, most of the developed countries also had Universal Health Care. Most of them also had significantly higher tax rates than we do as well. Note that Costa Rica has no standing army and her tax rate is the lowest.

So that got me to thinking…  if we want Universal Health care like developed countries such as Australia, England, Japan or Sweeden would we be willing to pay their tax rates in order to get it? Would you be willing to pay an additional 10% of your income to get Universal Health Care?

If we look at the average tax rate (not the  marginal rate on the last dollar earned) including deductions and Social Security payments, according to the OECD the following table shows how the various countries compare. Based on a married couple with a single wage earner and two children. Note that based on this measurement of a typical family the United States falls very near the bottom of the list of OECD countries with a much lower tax rate than developed European countries like Denmark, Hungary, Austria, Belgium, Finland, Netherlands, Norway, Turkey, Slovenia, United Kingdom, Italy, France, Austria, Germany, Greece, Poland etc. Also well below non-european countries like Australia, Japan, New Zealsnd, Israel, Canada, etc. Leaving us a much larger portion of our income to spend as we choose on health care or health care insurance if it is not provided by our employer. Note that the country that many proponents of Universal Health Care use is the UK whose average tax rate on a typical family is roughly triple that of the U.S.

Many young doctors are afraid that Universal Health care will reduce the quality and availability of health care in the United States.

Regarding Universal Health Care, according to Dr. William Campbell Douglas,

In England…

14,000 seniors with cancer DIE every year because they’re refused life-saving treatments that patients routinely get in other nations.

For full information see article on U.S. Healthcare Trends-Young Docs Not Optimistic

OECD Tax Statistics

Source OECD

See Also:

How U.S. Unemployment Rates Compare to other OECD Countries