Conclusion. The tax rates in Australia are among the highest in the world. Compared to the US, high earners will be paying far higher rates on much lower incomes. However, compared to the UK, Australia's tax rates are on par, or slightly lower.
First, despite often-repeated claims that Australia is a “high-tax country”, we are actually towards the bottom among industrialised nations.
The United Kingdom ranked 23rd¹ out of 38 OECD countries in terms of the tax-to-GDP ratio in 2021. In 2021, the United Kingdom had a tax-to-GDP ratio of 33.5% compared with the OECD average of 34.1%. In 2020, the United Kingdom was ranked 25th out of the 38 OECD countries in terms of the tax-to-GDP ratio.
In absolute terms, you pay less income tax in the US. The highest rate of income tax in the US is 37% if you earn over $523k. In the UK, it's 45% if you earn over £150k. In many US states, you also have to pay state taxes - some states pay nothing, but New York, for example, the state taxes can be an additional 8.8%.
Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) had the highest top statutory personal income tax rates in Europe among OECD countries in 2022. Hungary (15 percent), Estonia (20 percent), and the Czech Republic (23 percent) had the lowest top statutory personal income top rates in Europe.
Côte d'Ivoire citizens pay the highest income taxes in the world according to a survey by World Population Review.
The rise in interest rates is a key reason why the government have had to increase taxes, despite the political costs. But, it's not just short-term problems, Other long-term problems include the UK's planning systems, which make it easy to block or at least delay the building of housing and investment projects.
Without them it would be impossible to pay for the country's defence services, its health, welfare and social services, its schools and universities, and its transport systems. In addition to these huge areas of expenditure, financial support is given to other vital areas such as industry, sport, heritage and culture.
The main reason Australia ranks so highly on individual income tax levels is because Australians don't pay separate social security taxes. These account for an average 25.9% of total tax revenue, or close to 9% of GDP, across the OECD.
A2– The average salary in Australia is relatively high compared to many other countries due to their strong economy, high cost of living, and labor laws.
Sixty-six people earned more than $1 million and paid no income tax in 2020-21, while the majority of Australia's highest earners reside in Sydney's eastern suburbs, according to newly released figures by the Australian Taxation Office (ATO).
The cost of living in Australia is, on average, 21% higher than the cost of living in the UK. And the average salary in Australia is 17.4% higher than this in the UK. Hence, it is safe to say that life in the UK is slightly easier (apart from the cold, rain and darkness, that is).
Taxes paid to Australia generally tend to be higher than US taxes due. The highest Australian tax rate is 45%, whereas the highest US tax rate is 37%.
Housing, transportation, food and drink, and healthcare are the major expenses to consider when comparing the two countries. While the cost of living in Australia is generally higher than in the UK, it offers a high quality of life and a great lifestyle.
The UK is in the middle of the pack when it comes to how much tax it raises overall. But many other European countries have much higher taxes on workers' salaries. For example, if the UK imported the French tax system, not 28% but 48% of the cost of employing someone on £28,000 would be paid in tax.
Step 2: Tax on average wages, Canada vs. UK. According to the OECD, as a percentage of GDP total tax take in Canada is nearly 40% while in the UK it is below 35%. You can see this in the taxes on an individual's salary below.
Unrealised capital gains are generally not taxed and this allows rich people to accrue value from their assets without having to pay tax on it. Moreover, assets (financial, property, etc.) can be used as collateral to raise loans.
Australia's 2020 tax-to-GDP ratio ranked it 30th¹ out of 38 OECD countries in terms of the tax- to-GDP ratio compared with the 2021 figures. In 2020 Australia had a tax-to-GDP ratio of 28.5%, compared with the OECD average of 34.1% in 2021 and 33.6% in 2020.
If you make $50,000 a year living in Australia, you will be taxed $7,717. That means that your net pay will be $42,283 per year, or $3,524 per month. Your average tax rate is 15.4% and your marginal tax rate is 34.5%. This marginal tax rate means that your immediate additional income will be taxed at this rate.
Income you need to declare and pay tax on if you are in Australia as a foreign or temporary resident. Employment income from certain types of international work may be exempt from Australian tax. If you come to Australia or go overseas, you can work out your residency for tax purposes using the residency tests.
These were the tax rates in 2022. The tax rates are: 15%, 20.5%, 26%, 29%, and 33%. Let's say you're a student who worked part-time over the winter and spring, and you made $10,000. Your income would be in the first bracket, and your tax rate would be 15%.
The Federal Income Tax Brackets
The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you're one of the lucky few to earn enough to fall into the 37% bracket, that doesn't mean that the entirety of your taxable income will be subject to a 37% tax.
Summary of zero income tax countries
Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.