The USA is considered a relatively low-tax country compared to other high-income, developed nations (OECD members). While it has high income tax rates for some, total tax revenue as a percentage of GDP is among the lowest, at roughly 25-27%, compared to the 34% average of its peers.
Tax-to-GDP ratio compared to the OECD, 2023
In 2023, the United States had a tax-to-GDP ratio of 25.2% compared with the OECD average of 33.9%. In 2022, the United States was ranked 31st out of the 38 OECD countries in terms of the tax-to-GDP ratio.
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.
The United States is the world's preeminent tax haven. Tax havens are defined as allowing secrecy and having low or zero tax rates; for nonresident aliens, the United States offers both.
There isn't one single "highest tax paying country" as it depends on what's measured (income, corporate, total tax revenue), but countries like Denmark, Finland, Japan, and Ivory Coast (Côte d'Ivoire) consistently rank highest for top personal income tax rates, often exceeding 50-60%, while nations like Belgium can have the highest overall tax burden on labor (tax wedge) for average earners, with high social security. Nordic countries and some European nations generally have high income taxes, funding extensive social services.
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Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.
Key Takeaways
Nine U.S. states levy no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Sales, property, and excise taxes can be higher in states with no income tax as a trade-off to fund important government services.
In contrast, corporate and personal income taxes are far higher in the US than in low-tax countries in Europe like Poland, Bulgaria, Romania, Ukraine, and Hungary. So, Eastern European tax rates compared to the US are more favorable.
The UAE does not impose income tax on individuals, investors or corporates, with the exception of oil companies and branches of foreign banks. As a country with a free economy model since inception, it allows individuals and investors to freely repatriate their profits in entirety.
Americans' Opinions of the Federal Income Taxes They Pay
Currently, 59% say their taxes are too high, 38% about right and 2% too low. The percentage saying their taxes are too high is up from 45% in 2019 and nearly ties the recent high of 60% in 2023.
Tax revenue (% of GDP) in United Arab Emirates was reported at 0.62686 % in 2023, according to the World Bank collection of development indicators, compiled from officially recognized sources.
Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017.
To buy a house, you generally need an income that allows for housing costs (mortgage, taxes, insurance) to be around 28-36% of your gross monthly income, but recent studies show buyers often need $100k+ annual income to afford a median-priced home due to rising prices and rates, with specific requirements varying by location and loan type. A common guideline is the 28/36 rule: spend no more than 28% on housing and 36% on total debt, but lenders look at your Debt-to-Income (DTI) ratio, ideally keeping total debt under 43%.