Eurostat, the statistical agency of the European Union, has released an informative update of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. trends across the EU over the past decade. By and large, the report shows a downward sloping trend in top statutory tax rates for both personal income taxes and corporate income taxes.
On average, the top personal income tax rate among the 27 EU nations fell 7.2 percentage points between 2000 and 2010, from 44.7 percent to 37.5 percent. Only four countries increased their personal income tax rates – Latvia (+1.0%), Portugal (+2.0%), Sweden (+4.9%), and the U.K. (a whopping +10.0% to 50.0%).
But the real story is on corporate income taxes where every country except Hungary, Malta, and Norway cut their top corporate tax rate during the past decade. Hungary was the only country to raise their rate, albeit 1 percentage point to 20.6 from 19.6.
As the table below shows, on average, the top statutory corporate tax rate among the EU27 fell 8.7 percentage points, from 31.9 percent to 23.2 percent. Among the 16 largest EU nations, the average rate is 25.7 percent.
By contrast, the top federal corporate rate in the U.S. has been fixed at 35 percent since 1993, and tops 39 percent when the average state rate is added to it. This is further evidence that the U.S. corporate tax rate is out of step with the rest of the developed world and needs to be cut dramatically for our economy to remain competitive globally.
| Top Statutory Tax Rate on Corporate Income | ||||
| Country | 2000 | 2009 | 2010 | Difference 2000 — 2010 |
| EU 27* | 31.9 | 23.5 | 23.2 | -8.7 |
| EA 16* | 34.9 | 25.9 | 25.7 | -9.2 |
| Belgium | 40.2 | 34.0 | 34.0 | -6.2 |
| Bulgaria | 32.5 | 10.0 | 10.0 | -22.5 |
| Czech Republic | 31.0 | 20.0 | 19.0 | -12.0 |
| Denmark | 32.0 | 25.0 | 25.0 | -7.0 |
| Germany | 51.6 | 29.8 | 29.8 | -21.8 |
| Estonia | 26.0 | 21.0 | 21.0 | -5.0 |
| Ireland | 24.0 | 12.5 | 12.5 | -11.5 |
| Greece | 40.0 | 25.0 | 24.0 | -16.0 |
| Spain | 35.0 | 30.0 | 30.0 | -5.0 |
| France | 37.8 | 34.4 | 34.4 | -3.4 |
| Italy | 41.3 | 31.4 | 31.4 | -9.9 |
| Cyprus | 29.0 | 10.0 | 10.0 | -19.0 |
| Latvia | 25.0 | 15.0 | 15.0 | -10.0 |
| Lithuania | 24.0 | 20.0 | 15.0 | -9.0 |
| Luxembourg | 37.5 | 28.6 | 28.6 | -8.9 |
| Hungary | 19.6 | 21.3 | 20.6 | 1.0 |
| Malta | 35.0 | 35.0 | 35.0 | 0.0 |
| Netherlands | 35.0 | 25.5 | 25.5 | -9.5 |
| Austria | 34.0 | 25.0 | 25.0 | -9.0 |
| Poland | 30.0 | 19.0 | 19.0 | -11.0 |
| Portugal | 35.2 | 26.5 | 26.5 | -8.7 |
| Romania | 25.0 | 16.0 | 16.0 | -9.0 |
| Slovenia | 25.0 | 21.0 | 20.0 | -5.0 |
| Slovakia | 29.0 | 19.0 | 19.0 | -10.0 |
| Finland | 29.0 | 26.0 | 26.0 | -3.0 |
| Sweden | 28.0 | 26.3 | 26.3 | -1.7 |
| United Kingdom | 30.0 | 28.0 | 28.0 | -2.0 |
| Norway | 28.0 | 28.0 | 28.0 | 0.0 |
| Iceland | 30.0 | 15.0 | 18.0 | -12.0 |
| * Arithmetic average |
Source: Eurostat, "EU27 Tax Ratio Fell to 39.3% of GDP in 2008."
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