Dateline: Tbilisi, Georgia
There is an argument in the United States that the Left just can’t resist making when it comes to justifying tax hikes: “We’re the only industrialized nation with taxes this low.”
In fact, any time they can argue that we’re the only industrialized nation that hasn’t done something on their liberal agenda, they’ll do it.
Guys like Bernie Sanders have even made a presidential campaign out of it.
Well, guess what, we’re also the only industrialized country (and almost the only country in the world) that has citizenship-based taxation.
Sadly, it’s true. We’re the only nation on the planet where people who choose to leave the country — knowing full well that they will receive zero services from a government that wasn’t providing them much to start with — still have to pay taxes.
And, despite the high taxes in many countries in the West, we are also one of the only countries in the world that’s actually raising taxes on people.
We’ve spoken before about the general pattern throughout the world of countries lowering tax rates for businesses (we counted at least 39 of them), but there is also a trend across countries to lower income tax rates.
In 2015, the global average for income tax of 30.76% was the lowest its been in at least 10 years, and that average is almost two full percentage points below what it was in 2006.
Heck, even Sweden has lowered its taxes!
When I was in Sweden last May, I was surprised when the train I was waiting for was delayed 15 minutes. I joked to the guy who was with me that with all the high taxes they pay I had forgotten that not everything was perfect.
Without hesitation, the man admitted that they had just lowered the tax rates and, because of that, it seemed that everything was falling apart. Even so, Sweden and many other countries throughout the world have decided to lower taxes in recent years.
But are your taxes going down?
In the United States, the discussion isn’t about lowering taxes at all. Instead, it’s about making everyone pay their fair share and getting you to pay more.
To illustrate just how alone we are in the world, we did a little research and found this list of countries that have lowered their income tax in the past ten years.
You’ll never guess who isn’t on the list.
Twenty-one countries that have lowered personal income tax rates
1. Colombia Back in 2007, Colombia slashed its income tax rate from 38.5% to 24%. However, the following year they bumped it up to 33% where it has remained to today. Colombia has also reduced corporate taxes in a successful push to make the country more attractive to investors.
2. Croatia While it’s too high of a rate for my tastes, Croatia followed the worldwide trend of reducing tax rates when it cut its income tax back in 2010 from 45% to 40%.
3. Egypt Ten years ago, Egypt had an income tax rate of 34%. In 2007 the country slashed taxes to 20% and stayed at that rate until 2014 when they raised taxes to 25%. Just last year, however, they dropped the rate down to 22%, making Egypt one of the lower tax jurisdictions on this list.
4. Denmark While by no means a low-tax country, Denmark has reduced its tax rate by over 10% from it’s highest rate of 65.9%. Don’t plan on living in socialist Denmark, though, if you aren’t ready to pay 55.8% of your income in taxes.
5. Estonia One of the biggest success stories from the former Soviet countries, Estonia set an example that many countries throughout Eastern Europe have followed in pursuit of economic development. Not only are corporate taxes extremely low in this Baltic country, but income taxes as well. In 2015, Estonia dropped its already low personal income tax rate of 21% to 20%.
6. The Euro Area According to one report, the average income tax rate among the 19 countries in the Euro area has gone down another 0.2% in one year and currently sits at 42.1%. It is far from it’s highest rate of 49%, but still shy of it’s lowest rate of 38.8%.
7 The European Union With even lower numbers than the Euro area, the 28 countries in the European Union have also taken to lowering their income tax rates. The current average is 39.3%, not far from the union’s lowest rate in history of 38%.
8. Europe Once you take into account all 50 countries in the European region, Europe’s average tax rate is 32.19%, no doubt taking into account the low-tax jurisdictions throughout Eastern Europe. Europe’s overall income tax rate has decreased at a steady pace from 35.6% in 2006.
9. Finland Finland is another one of those countries that the Left just loves to talk about, and yet is also dropping it’s tax rates. This Nordic country has cut its income tax from 62.2% to 51.6%. Don’t get your hopes up that they will go much lower though. The lowest the income tax has ever been in Finland is 49%.
10. Gibraltar While Gibraltar has reduced its income tax from 42% to 40%, the decrease is nothing in comparison to the recent tax reductions for businesses. Already a tax-free jurisdiction for international business companies, Gibraltar recently cut taxes for companies doing business in the country from 35% to 10%.
11. Latvia Following in the footsteps of Estonia, Latvia has reduced taxes on all levels, including the personal income tax. In 2015, the country cut the income tax another one percent, from 24% to its lowest rate yet of 23%.
12. Lesotho An interesting addition to our list is this landlocked country surrounded by South Africa. Lesotho decreased its personal income tax from 35% in 2014 to 30% in 2015.
13. Malaysia has not only reduced taxes for businesses, but also for individuals. In 2015 this Southeast Asian country reduced the personal income tax from 26% to an all-time low of 25%.
14. New Zealand One of the most promising changes in the developed world is New Zealand’s drop from tax rates of 39% in 2008 to the present 33% income tax rate.
15. Norway It appears that all the Nordic countries — you know, the countries that are so often used to illustrate the benefits of high taxes — are reducing taxes. Still, 47.2% is a big tax pill to swallow. I won’t be getting residency in Norway any time soon.
16. Panama An emerging economy with favorable tax levels, Panama reduced taxes in 2010 from 27% to 25%. For many people in the U.S., Panama has long been an attractive place to retire. Based on these rates, it looks like Panama is a good place for anyone to set up residency.
17. Poland In 2009, Poland took a chunk out of its tax policy, decreasing the income tax by a full 8%. Now, instead of the unattractive 40% the Polish government once demanded, the rate is at a reasonable 32%.
18. Sweden As I mentioned before, even Sweden is reducing taxes. While the current income tax rate of 57% isn’t much to applaud, the corporate tax rate has steadily declined to its current rate of 22%.
19. Thailand While I’m not a big fan of Thailand, I have to announce good news when I see it. The good news here is that in 2013, Thailand reduced its income tax from 37% to 35%.
20. Vietnam Another Southeast Asian country that has reduced taxes recently is Vietnam. In 2008 the country was demanding 40% in tax. In 2009 they reduced that rate to 35%.
21. Yemen Perhaps the most interesting country on the list, Yemen also has the lowest personal income tax rate. In 2010 this Middle Eastern country reduced taxes from the already low rate of 20% to 15%.