11 May 2021

The taxation of capital—at both the individual and the corporate level – is much debated and affects economic growth by lowering the incentives to save and invest.

It is useful to compare capital income taxation across countries; this is not trivial. Countries have many different tax rates, exemptions, and special rules.

We compute the average tax burden on capital income from aggregate statistics by dividing total capital tax revenue by total capital income. This is an approximation because households’ capital income taxes are not observed directly. Our method is well-used in the literature but has to our knowledge not been used to compare capital taxation across countries in recent years.

Among the 30 OECD countries for which data is available, the average tax burden on all types of capital income is 29 percent, with a range from 9 percent in Lithuania to 50 percent in Canada. In general, English-speaking countries tend to have high capital taxes and Eastern European countries tend to have the lowest capital taxes. The data is from 2018 in most cases.