Does Lower Income Tax Make a Happier Country?

Does Lower Income Tax Make a Happier Country?

According to extensive research, Finland was named the happiest country in the world. The report was compiled from the answers of a series of questions relating to the quality of people’s lives, from 0 to 10. The average was taken from over 2015-2017, with 156 countries taking part.

The World Happiness Report scored each country against a hypothetical nation named Dystopia. Explanations for the levels of happiness per country were broken down into the following areas:

  • GDP per capita
  • Social support
  • Healthy life expectancy
  • Freedom to make life choices
  • Generosity
  • Perceptions of corruption

Tilly Bailey & Irvine Law, medical negligence claims experts investigate further. Is there a correlation between less income tax and happiness, for example, as we lose less of our hard-earned wage?

Which countries have the lowest income tax?

According to this report, which excludes oil-rich nations, the lowest income tax rates are enjoyed by:

However, are these countries positioned in the same way on the happiness report? In the report of 156 countries, we placed the benchmark at 50th place — anything above 50th place would be deemed “happy” and anything below 50th place would be deemed “unhappy” in comparison.

Guatemala came 30th, Bulgaria 100th, Bolivia 66th, Lithuania 50th, Romania 52nd, Ukraine 138th, Singapore 34th, and Latvia 53rd. The Cayman Islands and Bahamas did not have data in the report, sadly. Unfortunately, the Cayman Islands and Bahamas did not have data to report on.

The highest income-taxed countries

Although we have looked at the lowest income-taxed countries, it’s important to also review the highest. Nomad Capitalist named 15 high-tax countries: Germany, Ireland, Greece, Italy, Slovenia, Israel, France, Finland, the Netherlands, Belgium, Austria, Denmark, Japan, Portugal, and Sweden. Sweden has an income tax rate as high as 57.1%.

“I would advise you to think twice when it comes to being a resident of one of these countries […] pick a place that treats you best” commented the author, Andrew Henderson.

Because of this, it would make sense that a higher tax rate would equal a lower level of happiness. Again, with 50th place as our benchmark, let’s see where these high-tax countries landed on the World Happiness Report:

Although these countries have high tax rates, only four landed under the 50th benchmark. In fact, four appear in the top ten happiest countries. None of the lower-tax rate countries broke into the top ten, in contrast.

Although Sweden may have a higher tax rate, there were more supreme benefits in the country that include affordable childcare, 480 days of joint parental leave, pensions and more.

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