Listen, I know I’ve been harping on taxes these past couple of weeks. Perhaps I’m a little bitter due to all the idiotic “budget” announcements the Canadian government has been making that only seem to make things worse for pretty much everyone.
Americans – I know you feel me on this, too.
But you may find it comforting to know that there are many other countries that are in a worse tax situation than we are.
After all, misery loves company, right?
But there’s more to it than that – as someone looking to move overseas you NEED to be aware of the tax regime in the countries on your list.
It’s not as fun and sexy to think about as a lower cost of living and a better climate, but it should be on your radar nonetheless as an important part of your decision-making process. After all, we aren’t looking to jump from one high-tax net to another.
So, with that in mind, let’s take a look at the countries with the highest taxes in the world, and how they stack up against our taxes here in Canada and the United States.
Highest Individual Taxes
Individual taxes are the biggest consideration for most of us. They consist of everything from federal tax, provincial/state tax, city tax, and even public pensions which, while they are supposed to benefit you down the road, are a tax nonetheless as the money is taken from you by force.
When it comes to individual taxes, the following countries lead the pack – in a bad way. Here are the top 10 countries with the highest personal income taxes, according to World Population Review:
- Belgium – 79.5%
- Finland – 66.75%
- Portugal – 64%
- United Kingdom – 63.25%
- Switzerland – 59.7%
- Aruba – 58.95%
- Estonia – 58.4%
- Denmark – 57.11%
- Japan – 55%
- Austria – 55%
For reference, Canada comes in at 54% (so close!) and the United States at 51.6%. So, even though we all feel we pay way too much in taxes to our wasteful, corrupt governments, we can at least be happy we don’t live in Belgium!
Highest Corporate Taxes
Now let’s move on to corporate taxes. Which countries are the least welcoming to business owners? Let’s take a look at the data, courtesy of Trading Economics:
- Puerto Rico – 37.5%
- Suriname – 36%
- Argentina – 35%
- Chad – 35%
- Colombia – 35%
- Equatorial Guinea – 35%
- Guinea – 35%
- Malta – 35%
- Sudan – 35%
- India – 34.95%
How about Canada and the United States? Well, Canada clocks in at 26.5% and the United States at 21%.
Compared to some of the competition, we don’t look too shabby in this category! But, as always, each situation is unique so, no matter where you live, make sure you work with an accountant to make sure you are set up as tax efficiently as possible.
Highest Sales Taxes
Finally, let’s take a look at the countries with the highest sales taxes in the world, as per Trading Economics:
- Bhutan – 50%
- Hungary – 27%
- Croatia – 25%
- Denmark – 25%
- Norway – 25%
- Sweden – 25%
- Finland – 24%
- Greece – 24%
- Iceland – 24%
- Ireland, Poland, Portugal – 23%
I’ve got to say, living in Alberta, Canada, I feel pretty lucky because our sales tax here is only 5%. Other parts of Canada are as high as 15%.
Sales taxes vary even more in the United States since they are a combination of state and local rates, and can vary between products and services. Louisiana has the highest overall average rate at 9.56% and Alaska is the lowest at 1.82%.
Once again, we see that our sales tax situation could be a whole lot worse than what it is in Canada and the U.S.
High Tax = Happiness?
Awhile ago, I did an article on the supposedly “Happiest Countries in the World” as per the UN.
Something that was very clear when looking at the list – which featured Finland, Denmark, Iceland, and Sweden in the top spots, was that these were all very high-tax countries.
And, hey, they pretty much have to be to pay for all their social welfare programs.
What I didn’t realize is that they were getting royally screwed on not just their income tax, but their sales taxes as well, as you can see in the section above.
So, not only does the government already take a large portion of their income via income tax, but then they get massively taxed again when they buy anything with their already-taxed income. Now that’s a tongue-twister!
Happies countries in the world, eh? I don’t know about you but, as someone from a high-tax country myself, I’m pretty sure I’d be happier if I was paying a lot less tax. And had better weather! But that’s another rant for another day.
We are all subjected to this over-taxation to varying, but ever-increasing, degrees. I think you’ll agree the poem below sums things up perfectly.
The Tax Poem
By “Author Unknown”
Tax his land, tax his wage,
Tax his bed in which he lays.
Tax his tractor, tax his mule,
Teach him taxes is the rule.
Tax his cow, tax his goat,
Tax his pants, tax his coat.
Tax his ties, tax his shirts,
Tax his work, tax his dirt.
Tax his chew, tax his smoke,
Teach him taxes are no joke.
Tax his car, tax his grass,
Tax the roads he must pass.
Tax his food, tax his drink,
Tax him if he tries to think.
Tax his sodas, tax his beers,
If he cries, tax his tears.
Tax his bills, tax his gas,
Tax his notes, tax his cash.
Tax him good and let him know
That after tax, he has no dough.
If he hollers, tax him more,
Tax him until he’s good and sore.
Tax his coffin, tax his grave,
Tax the sod in which he lays.
Put these words upon his tomb,
“Taxes drove me to my doom!”
And when he’s gone, we won’t relax,
We’ll still want inheritance tax.
Conclusion
As the saying goes, nothing is certain in life but death and taxes.
But you don’t need to resign yourself to forking over half your income in taxes every year for the rest of your life.
While I detailed some of the worst tax offenders above, there are many jurisdictions across the world that offer much more favorable tax rules, including the countries with territorial taxes I wrote about a couple of weeks ago. There are many countries with zero tax, too!
People love to parrot phrases like “taxes are the price we pay to live in a civilized society” as a cope that makes them feel better about staying in the system. It also gives them an excuse not to try to improve their situation. And it’s a great way for them to try to keep YOU in the system, too.
But don’t let the crabs in the bucket steer you wrong. Because yes, it IS possible to pay less tax and still live in a civilized society.
In the meantime, the great news for Canadians and Americans? It could be worse!
Want to learn more about investing and living abroad? Subscribe to Escape Artist Insiders magazine for all the most up to date advice straight from our offshore experts. This month’s issue is all about overseas investment properties and you won’t want to miss it. Get your copy today!
Thanks for reading and see you next week!
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