Contribution #14: Tax Rates for High Earners Increasing Around the Globe

Staying in line with Chapter 15, I found an article from the SHRM website that highlighted the intensity of the global tax rate market and the effect it might on offshoring employees. Especially for American companies, it is important for their HR department to keep an eye on the personal income tax rate when trying to relocate employees or giving input to management regarding their expansion to a country overseas. HR managers might have a hard time convincing employees to move to Europe for business when personal income tax rates are roughly 50 percent in the U.K. If the company expects to move operations to the U.K., HR must be able to offer better benefits or a higher salary to compensate for the high tax rates. However, if they wanted to send operations and employees to Denmark, it would be a little easier because they just lowered their top rate by 7 percent. HR might also recommend against moving to Sweden, Japan, or Chile, countries that hold the highest rates in their respective global regions. I find this similar to what is happening in the United States. Even in recent free agent negotiations in sports, teams are making note to players that their state has no state income tax which means they make more money than they would in a state that has a high state income tax. It is just another benefit that the “employer” can offer to its demanding “employee.”