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Chart of the day: the highest income tax rates

How would a top rate of 75 per cent in France compare with other countries?

By George Eaton Published 29 February 2012 17:49

With François Hollande promising to introduce a top income tax rate of 75 per cent if elected as French president, now is an apt time to look at the world's top tax rates. As the chart below shows, Hollande's proposed rate for incomes over €1 million would dwarf even that of Sweden (56.6 per cent).

The UK's top rate of tax has been 50 per cent since 2010 (it was previously raised from 40 to 45 per cent in 2009), the joint fourth-highest in the world, prompting howls of anguish from the right. Yet 50 per cent is far from the top rate of 83 per cent (98 per cent on unearned income) seen under Jim Callaghan. Even Margaret Thatcher managed to live with a top rate of 60 per cent for nine years of her premiership (it was reduced to 40 per cent in Nigel Lawson's famous 1988 Budget).

Mercifully for the super-rich, however, Ed Miliband has already indicated that he won't be following Hollande's lead on tax.

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Tags: Chart of the day

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View the discussion thread.

19 comments

Thu, 2012-03-01 09:39 — John (not verified)

What's the top rate for the USA, Canada, and Australia?

Thu, 2012-03-01 09:49 — matthew fox (not verified)

More dross from you Inastew, they cut corporation tax rates to boost income tax revenues?

You seem to be defying the argument that cutting rates boost revenues for the same tax.

Surely if corporation tax rate were cut, then revenues should have increased, that is the lie we keep hearing peddled?

Wed, 2012-02-29 17:55 — Marco (not verified)

What about NI? Then it becomes around 62%

Wed, 2012-02-29 18:08 — John Moss (not verified)

UK top rate is 52% when NI taken in to account.

That rises to 57.8% if you also factor in Employer NI.

Wed, 2012-02-29 18:17 — Mr Danger

Tax rates used to be higher, but they didn't result in more tax revenues.

Wed, 2012-02-29 18:18 — AlastairX (not verified)

You're talking highest MARGINAL income rates here. But even then, these things are not simple to compare. A significant proportion of Swedish income tax goes to direct to state (local) government, not central govt. Compare/contrast vs the UK is not so simple.

The ultimate irony here is the left's railing against "regressive" VAT rises at the same time as they pine for a more Nordic tax model. You can't have it both ways.

Wed, 2012-02-29 18:21 — AlastairX (not verified)

If you add NI to the picture you must also add the social security burden for the other countries; in Sweden it is a 30% rate on the employer side.

Wed, 2012-02-29 18:51 — John Hawkes (not verified)

Very misleading graph which doesn't highlight overall tax burdens on individuals. Lots of articles on NS highlighting dodgy statistics from the Right, but when the Left fudges the numbers to promote higher taxes the NS rolls with it as expected.

Wed, 2012-02-29 18:59 — Marco (not verified)

So in essence judging from both left/right here it's not as simplistic as saying higher marginal rates because it's far more complicated than that.

What we must do is provide a transparent tax system that is simple to understand and less bureaucratic.

Taxation is very high in this Country, it's just more stealth focussed than other places. I'd personally like to see VAT increase however to around 23%, helping our trade balance but in the process reducing income tax for all.

Wed, 2012-02-29 19:03 — damianneum

John, I'm sorry you feel it's misleading. The top rate of tax is of great political significance (look at the response to Hollande's proposal) and of some economic significance, which is why we looked at it in isolation.

We will publish future graphs on the overall tax burden.

Wed, 2012-02-29 20:09 — matthew fox (not verified)

I think you have to look at Ireland's famed 12.5% corporation tax rate to understand how rates impact on revenues.

The rate of 12.5% rate came into force in 2003.

Below is a list of Corporation tax revenues for Ireland.

2004 5.33
2005 5.49
2006 6.68
2007 6.39
2008 5.07
2009 3.90
2010 3.923

Wed, 2012-02-29 20:13 — Swavesey Sage (not verified)

The discussion seems to ignore the Laffer curve effect. High tax rates disencourage entrepreneurs, and are counter-productive in that tax take increases with lower overall taxation.
Osborne ignores Laffer at his peril.

Fri, 2012-03-02 22:30 — Eddy S (not verified)

This has got to be embarassing, at least add NI to the figures we therefore have the highest rate in the world.

Wed, 2012-02-29 20:26 — Indu Pendent (not verified)

Hollande is a problem for Labour as I think GeorgeE is making the point.

Firstly Hollande is branded a socialist (but fails at the first hurdle as swinging taxes on anyone rich or poor is popularist not socialist). Miliband needs to call himself a socialist to appease his party but not a French socialist which is bad socialist. Its a confusing message.

It highlights the core issue: Labour needs to define its values and the strategy for implementing them.

Miliband should not say he will not follow Hollande: he should say the 75% tax proposal is not consistent with Labour's strategy so will not be implemented.

Fri, 2012-03-02 22:37 — Eddy S (not verified)

@danielle good point, we should let everyone earn 25k tax free that would really help people on low incomes, the squeezed middle and keep the higher taxes. We could psy for this by abolishing tax credits the system that's very easy to abuse and with high admin costs. Letting every person earn 25k would help with work incentives and increase the number of jobs too as employers wouldnt have to worry about the admin burden and cost of taking on new employees

Wed, 2012-02-29 20:31 — Indu Pendent (not verified)

@matt

You simply dont get it.

Ireland was subject to large capital workers and revenue as tech companies set up their attracted by the business environment including the 12.5% CT.

The 1.4Bn Euro drop in CT will be tiny compared to the economic benefit.

Wed, 2012-02-29 20:38 — Lox (not verified)

Well said, Indu. 12.5%CT in Ireland resulted in a far higher employment rate in Ireland, with a consequent increase in Income Tax revenue and a decrease in social security costs.

Unfortunately for the French, they appear to have the choice between the incumbent petulant midget, a Socialist economic illiterate (Hollande) and a Poujadist econimic illiterate (Le Pen). Who would have thought that Sarkozy could look like a credible choice against anyone?

Wed, 2012-02-29 22:06 — Mr Danger

The best way to look at tax is as a % of GDP. This captures the overall tax burden on the economy.

Wikipedia has such a list.

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percent...

In George's defence, it doesn't paint a radically different picture than the chart he provides.

Thu, 2012-03-01 00:00 — Daniele1

Why is it always "economic illiteracy" to tax the rich? and "economic sense" to tax the poor?
Why all these good people of the right are always ready to accept that if you tax the rich, they simply won't pay their due or worse, leave!So..might as well not bother!
Why do these same people find "benefit scroungers" so abhorrent when the money these guys fiddle is a drop in the ocean, compared to what the rich get away with?
One thing is certain,they have no care about social justice.The gross inequality of treatment in terms of taxation between the rich and the ordinary worker doesn't even register on their radar.
Another thing is sure, France may get itself a proper socialist leader in a few weeks time. Meanwhile in Britain, the Labour party is led by a mouse whose sole concern is not to upset anybody.This government has no opposition and is slowly becoming a one party state.God help the people of Britain!the Labour leader certainly won't.