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How US Top Tax Rates Compare (Interactive)

Click image for interactive: See how the combined top rate in United States stacks up against those in other economies.

When the top tax rate really kicks in – CNNMoney.

On the heels of one of this year’s most highly contested policy changes — raising taxes on the top 2% of income earners through changes in the American Taxpayer Relief Act (the fiscal cliff deal) — the argument that the wealthy are footing too much of the bill still reigns as a benchmark argument in Washington.

Are the wealthy really paying too much, or are they “not paying their fair share,” as many congressional Democrats still insist?

The top one percent contribute nearly 40% of all federal tax revenue; at the same time, they also garner nearly 20% of national income.  So are they taxed too much, too little, or just right?  Ultimately, it’s a matter of opinion, but if you’re comparing the US to other OECD countries, the rich don’t have much to complain about.

Based on data from the Tax Policy Center and OECD, CNN Money produced an interactive map comparing the U.S. top tax rates to the 33 other OECD member countries.  Here’s what they found:

Income Thresholds

Being in the top tax bracket in the US takes a lore more than in most other countries.  Of the 34 OECD members, only Canada ($410,000), Korea ($420,000) and Spain ($430,000) had higher thresholds for their top marginal tax rates than the US ($400,000).  In more than half of the countries sampled, the top tax rate fell on incomes of less than $100,000.  By that standard, the rich should feel pretty lucky to be taxed in the US.

Top Income Tax Rates

Income thresholds don’t tell the full story.  For example, while Spain has the highest income threshold for their top tax rate, they also have one of the highest rates – 52% – dampening any perceived benefit from the high threshold.  Likewise, while it only takes $47,000 to be in Mexico’s top bracket, the tax rate is only 30%.  So, a true comparison of countries’ tax rates needs to include both the thresholds and income tax rates.

Yet again, the US ranks as one of the best places for high income earners.  The top joint state and local income tax rate for 2012 was 44%.  This puts them in the bottom half of OECD countries, trumped by countries like Belgium and Denmark whose rates exceed 54%.  Nine countries had top rates above 50%, while only eight countries taxed the top below 40%.

What about other incomes?  Turns out, the story is the same when comparing tax rates for all income levels.  The US tax burden is relatively low compared to other countries; at worst, it’s about average.  

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JDKatz: Attorney's At LawJDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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At JDKatz: Attorneys at Law, each of our attorneys brings a unique set of experiences and perspectives to bear on our clients’ legal problems. For each case or task we take on, we assemble a team of lawyers ideally situated to our client’s specific needs and goals. Our managing partner, Jeffrey D. Katz, founded our firm in 2000 after starting his career in the tax department of Big Four accounting firm KPMG Peat Marwick. To learn more about our attorneys’ backgrounds and qualifications, please review their individual profiles.

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