The taxation of high-income earners: An international comparison
10 February 2017
The effective marginal tax rate is the total tax on the last euro earned, taking into account income tax as well as social contributions and consumption taxes. Considering only income taxes does not provide the whole picture of the distortionary effects of the tax system.
This paper presents a unique compilation of effective marginal tax rates on top incomes in 31 developed countries.
Sweden tops the list, at 75 percent. Slovakia has the lowest effective tax rate at 36 percent. Most western European countries are in the range 55 to 70 percent. The American top effective marginal tax rate is estimated to be 48 percent.
High marginal tax rates drive a wedge between private and social returns to economic activity and thus hurt incentives to work.