Sovereign countries with the lowest income taxes include Bahrain, Qatar and the United Arab Emirates, where the rate, regardless of income, is zero. Saudi Arabia also has no income tax, but Saudi nationals are obliged to pay “zakat,” a 2.5 percent Islamic assessment based on net wealth (not income), that is designed to support the Islamic community. And in Brunei Darussalam, only companies are subject to income tax, while in Kuwait, only foreign corporations and foreign interests in Kuwaiti corporations are subject to income taxes.
So which country has the highest income tax? Denmark had the highest income tax in 2000. Its top rate was 62 percent, and its basic tax rate started at 42 percent. Denmark’s tax code includes income taxes, work taxes, sales taxes, taxes on “luxury items” and various taxes that businesses must pay as a percentage of salaries. In return for these high taxes, Danes receive a range of government benefits, including health care, higher education and extensive social services.
Read Dane Per Hanson’s Mises.org articles on the horrific Danish social welfare and taxation system. (Here and here.)
