August 12, 2020 · 2 min read
Top earners in G7 countries pay 60% more income tax than those in BRICS countries.
Top earners in G7 countries with an income level of $1.5 million pay 60% more income tax than employees with the same income level in BRICS countries – this was revealed by a new study from the international accounting network UHY International, of which we are a member.
For comparison, individuals earning $1.5 million USD per year in G7 countries pay an average of $719,751 USD (a rate of 47.9%) in taxes, while in BRICS countries this figure is $446,883 USD (a rate of 29.8%).
In this regard, there are concerns that high tax rates in G7 countries may lead to money being invested in businesses in other more competitive jurisdictions where the income tax rate is lower.
Given the above, some G7 countries, namely: France, Canada, the USA, and the UK, have taken steps to reduce maximum income tax rates. In 2014, this figure in France was 45.8%, while currently, it stands at 40%.
Of all countries that participated in the UHY study, the lowest income tax rate is in Russia, where all taxpayers, including high-earners, pay only 13% income tax.
The highest tax rate among the 30 countries surveyed by UHY is in Denmark. Individuals earning $1.5 million USD pay more than half of their income in income tax – 53.2%.
Taxes in G7 countries have slightly decreased since the financial crisis, possibly due to government concerns that they might become uncompetitive, given the low tax rates in BRICS countries.
Conversely, as the economies of BRICS countries develop and their middle class expands, governments may increase marginal rates for higher incomes. As a result, the inequality between the economies of G7 and BRICS countries may decrease.
