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1 Alex Mengden, Savings and Investment: The Tax Treatment of Stock and Retirement Accounts in OECD and EU Countries 1 (2025)

handle is hein.taxfoundation/savistm0001 and id is 1 raw text is: TAX FOUNDATION Savings and Investment: The Tax Treatment of Stock and Retirement Accounts in OECD and EU Countries Alex Mengden Global Policy Analyst Sept. 2025 Key Findings * On average, in the Organisation for Co-operation and Development (OECD) and European Union, long- term capital gains from the sale of shares are taxed at a top rate of 18.19 percent, and dividends are taxed at a top rate of 22.87 percent. * Investment income is usually taxed twice, first at the corporate level and then again at the shareholder level (on dividends and capital gains), producing an average integrated tax rate on distributed corpo- rate income of 40.86 percent for dividends and 37.37 percent for capital gains in OECD and EU coun- tries. * The portion of after-tax earnings that workers set aside for savings and future consumption is often taxed twice, creating a bias against saving. Ideally, workers should only be taxed on their income once, either when earned or when withdrawn for spending, to avoid compounding disincentives to both labor earnings and savings. * To encourage long-term retirement saving, countries commonly provide tax preferences for private retirement accounts. These usually provide a tax exemption for the initial principal investment amount and/or for the investment returns. * Savings accounts that exempt contributions and returns on investment while deferring taxation until withdrawal allow policymakers to widen the eligibility to savings vehicles that may include hybrid in- come streams, such as start-ups and actively managed portfolios, diversifying household savings and removing tax penalties on those investments. * Tax-preferred private retirement accounts often have complex rules and limitations. Universal savings accounts could be a simpler alternative-or addition-to many countries' current systems of private retirement savings accounts. The Tax Foundation is the worlds leading nonpartisan tax policy 501 (c)(3) nonprofit. For over 80 years, our mission has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. TAX FOUNDATION 1325 G STREET, NW, SUITE 950, WASHINGTON, DC 20005 202-464-6200 1 taxfoundation.org