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 50^th place — anything above 50^th place would be deemed “happy” and anything below 50^th place would be deemed “unhappy” in comparison.

Guatemala came 30^th, Bulgaria 100^th, Bolivia 66^th, Lithuania 50^th, Romania 52^nd, Ukraine 138^th, Singapore 34^th, and Latvia 53^rd. 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 50^th 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 50^th 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.