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  Income Taxes

I have always heard that France has a high level of taxes but I found today that it's not true for income tax itself, it's only true if you add other things like social security.

When looking at income tax alone, for a single person without kid, it is even quite low compared to other countries.

Here is a small graph comparing tax rate in France, UK, USA, Belgium and Germany:

Income tax rate

Update: As per several requests, I added Brazil, and I also created this new graph correcting things based on Big Mac index so that comparing countries is now a bit less meaningless.

Income Tax rate corrected with Big Mac index

Today's TSUKKOMI(Total: 42) [Add a TSUKKOMI]
  Philip Van Hoof (2010-06-08 13:10)

Why do I live in Belgium :-\ ??

  Mårten (2010-06-08 13:14)

Put Sweden in the graph too.

  Steve (2010-06-08 13:18)

Philip, it's because you are taxed on your income but not on your ownership.

  Benoit (2010-06-08 13:27)

Denmark should be interesting as well.

  ammonkey (2010-06-08 13:58)

except social security in France is an obligation. So it's always TRUE...

  Pascal (2010-06-08 14:15)

Yes but then you would have to see how much people spend on health expenses or non mandatory health insurance on average, depending on their income... Yes it is mandatory but free eyglasses, free dental expenses, ... are to be taken into account.

  glandium (2010-06-08 14:26)

There is a problem with your graph, at least for the french income taxes, as the income tax rate is fixed within each range (tranche), it's not logarithmic as it appears on your graph.<br><br>As for free eye glasses, free dental expenses, that's not happening with social security alone, you need a "mutuelle" on top of it, and that's not free either. (social security reimburses like what, 7 euros for eye glasses ?)

  Pascal (2010-06-08 14:29)

This is the global rate. You pay 0% on part of your salary, ... 25% on part of it, etc. I compute the total for each salary and compute the global rate by dividing it by the salary.

  zanko (2010-06-08 15:06)

The americans pay taxes even when they have such a small revenue ???<br><br>Anyway, none of those tax rate are sufficiently progressives.

  a (2010-06-08 15:29)

I know it's not in Europe, but you should add Brazil to that graph. Then you'll start thinking that you really don't pay anything =P

  mike (2010-06-08 15:44)

Do you include US state income taxes as well (you could take the average across the states as your data)? Also, I don't think 10% at salary 0 is correct because we have the "earned income tax credit" that actually pays people to work at the very low end.<br><br>Not that you have the data for this, but instead of plotting simply the published rates, it would be more interesting to publish a regressed scatter plot of all the effective tax rates paid at each salary level.

  Olivier Crete (2010-06-08 15:50)

You definitely need to add any compulsory contribution like public Health Care. In other countries (like the US or Canada), it is included in the general income tax. Obviously, it doesn't tell you much services you get, but that is another discussion.

  Philip Van Hoof (2010-06-08 15:51)

@Benoit: We have "kadestraal inkomen" taxes too, and we have "registratiekosten" and notarial ones too when we buy real estate. So we definitely are taxed on ownership.<br><br>I can assure you that each imaginable tax that was ever invented by governments: we have it, plus an extra one on top. And they are all highest in the world.

  Frédéric Péters (2010-06-08 16:27)

The point of this post could simply be that it's not so simple... People and companies complaining against taxes are doing it *selectively* comparing to other countries, and their particularities, most often *deliberately* ignoring the bigger picture, (be it social security, different tax levels, tax cuts...)

  Pascal (2010-06-08 16:30)

Yes that's true, and this graph does not mean anything as a high salary in a country may be quite low in another so the tax ratio for 30k does not apply to the same kind of people in different countries.

  some guy (2010-06-08 16:31)

"The americans pay taxes even when they have such a small revenue ???"<br>No. Most taxpayers in the US are allowed at minimum 1 personal exemption for $3650 and the standard minimum deduction of $5700, which means the first $9350 of your income will not be taxed by the federal government. This seems comparable to the other countries noted in the chart, but I would have to admit that I know nothing about how they operate so I can't really comment on them.<br><br>The graph is true in spirit but false in practice for low-income people in the US, as they will get every cent that was withheld from their paycheck (if any of their income was) back and sometimes more depending on their situation.<br><br>The US federal income tax is insane, but it doesn't tax extremely poor people.

  Pascal (2010-06-08 16:40)

Thanks I had missed this information (which was not on the site I used). I included these amounts that Wikipedia confirmed and updated the graph. US are now more similar to others.

  some other guy (2010-06-08 18:24)

@someguy<br>The US Federal government does indeed tax extremely poor people. It's called "inflation" aka "the hidden tax" and it steals around 10% of the value of all existing dollars year after year after year. And that % will only be rising with all the trillions of new dollars created recently.

  voyou (2010-06-08 20:25)

The numbers here for US tax rates look much too high; where are you getting them from? A US taxpayer with a taxable income of $20,000 would be in the 15% tax band, so they would pay about $2500 in tax. That's 13% of their taxable income (and under 10% as a percent of their total income assuming they take the standard deduction), not the almost 20% your graph shows (for an income of 16000 euros).

  Jeff Waugh (2010-06-08 21:44)

Why are you mixing facts with your nasty European socialism?! </usa><br><br>[ Says a proud participant in a wonderful social democracy on the other side of the planet... :-) ]

  Pascal (2010-06-08 23:38)

For 16000 euros the graph is around 12 or 13% for US

  voyou (2010-06-09 00:27)

D'oh; I was confusing the cyan and the blue. Sorry about that.

  Philip Van Hoof (2010-06-09 15:36)

@some other guy:<br><br>Except that inflation is good for poor people, and not for rich people.<br><br>It's very simple to illustrate: if you don't have any money, then it really doesn't matter to you that money is worth less tomorrow. The _only_ thing that _does_ matter is that your salary increases as soon as possible. The period between start of inflation and your salary increasing you'd be earning 'percentage of inflation during that period' less money.<br><br>For a rich person with a huge amount of cash on the bank, he gets interest. So that levels out the inflation a bit.<br><br>For a rich person with a huge amount of cash under his pillow, the inflation is a punishment for not spending nor investing that money.<br><br>What happens to this 'lost value' of the rich person? It's indeed a hidden tax on them. A tax that the government doesn't have to ask the poor guy to pay up anymore.<br><br>So this hidden tax that you are talking about is good for poor people, and bad for rich people.<br><br>IF, and this is important, IF the inflation is kept modest. Because high inflation is _very_ bad for your economy. So bad that it'll create so much instability that jobs are affected. And then that's of course _not_ good for the poor guy anymore.<br><br>Hyperinflation is of course even worse. That's like a run on the currency, instead of on a bank.

  Pascal (2010-06-09 15:48)

Well inflation is good for poor people only if their salary increases which usually does not happen...<br>So it is worse for them as they can no longer afford eating correctly, etc while someone with cash in the bank will lose some of it but still be able to live normally.

  Philip Van Hoof (2010-06-10 10:23)

@Pascal: In Belgium we have automatic adaptation of salaries to the index. So employers are required to increase the salaries annually (by law).

  Pascal (2010-06-10 10:50)

Oh, that's great!

  Xav (2010-06-10 11:01)

What I would be really interested in is how much people *actually* pay, with regard to their income.<br>I'm sure the high income would show a much much lower tax rate.

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