Highest income tax rate: 50%
Average 2010 income: $52,320
The U.K. increased its highest tax rate by 10 percentage points in 2010 to 50 percent, joining the ranks of only three other countries with such a high marginal rate. In March, the government backtracked and cut the tax band for the highest earners to 45 percent,effective from April 2013.
As part of the reforms, the government also raised the income tax threshold to $14,300, taking more poorly paid people out of the tax net, while introducing a new stamp duty of 7 percent on the sale of property worth more than $3.24 million.
Britain’s top marginal tax rate kicks in at an income of $231,000. Although 50 percent is the current top rate of tax, the phasing out of personal allowances on income over $160,000 can result in a marginal tax rate of 60 percent. Workers have to pay a social security tax of 12 percent, which rises 2 percent on earnings above $1,259 per week. The country’s capital gains tax also ranges from 18 percent to 28 percent.
Britain’s tax debate was further fueled last month when Treasury data revealed that 6 percent of the country’s wealthiest people used tax reliefs to pay lessthan 10 percent tax in the 2010-11 financial year. That’s less than half the level paid by the average Briton. In response, the government proposed plans to cap tax relief on charitable donations to 25 percent of earnings, which charities and philanthropists warnwill discourage people from giving.
Pictured left: Street in London