Tax deadline day approaches for U.S., but tax bite being felt around the world

Tax deadline day approaches for U.S., but tax bite being felt around the world

In the U.S., experts say the complexity and contradictions taxpayers face are less the fault of the IRS than of Congress and the administration, who give the tax collectors their marching orders.

“The complexity is from legal systems trying to define incomes. Tax laws are piled up year after year after year and it gets messy due to Congress giving the IRS incoherent codes,” said Curtis Dubay, a tax policy analyst at The Heritage Foundation.

The United States currently uses a progressive-rate tax system. According to the Internal Revenue Service, in 2010 Americans who earned greater than $373,650, about 35 percent of their income was collected and those who earned up to $8,375, ten percent was collected.

“In the United States, when everything is said and done the top marginal tax rate is around 46 percent, so this is the federal level and then the state level. It gets high up there,” said Kyle Pomerleau, an economist for the Tax Foundation’s Center for Federal Tax Policy.

While Americans face the burden of collecting their own records and figuring out their own tax bills, the Danish government automatically receives information about pay, interest income and expenses from employers, banks, unemployment agencies and unions. As a result, very little information needs to be provided personally. Often times, it is sufficient for people to check the information in the statements they receive from the government.

France requires that citizens keep track of their own tax information and file with the government accordingly. Mexico does the same, but it has one of the lowest tax-to-GDP ratios along with Chile, Korea and the United States.

“It’s hard to compare taxes to other countries because other countries have entire systems in place,” said Mr. Dubay, “The bigger tax [bill] you have, the more complex it gets.”

Russia and countries formerly occupied by the Soviet Union had overall lower tax rates than the rest of Europe. In 2014, Russia collected a flat tax of 13 percent of individual income tax and Lithuania collected about 15 percent in comparison to the global average of 31.12 percent. For the highest tax bracket in the U.S., the federal government collected about 39.6 percent of personal income in 2014.

Norway has a 27 percent tax rate called a flat tax implemented according to the OECD. All citizens pay the same percentage rate no matter their income, and the rate does not go up for higher earners. Hungary, Estonia, and the Czech Republic has a flat tax rate for all citizens as well.

via NorthEast Calling http://ift.tt/1IbTvyE