Study: Countries tap the rich to combat red ink

Tax rates in the U.S. remained steady this year, but President Obama and Democratic leaders have vowed to follow the path already taken by other countries around the world. 

The report shows the U.K. implemented a 10-percent increase, raising its top rate from 40 percent to 50 percent for 2010 and 2011. 

Other Western European governments have followed suit. Amid the collapse of its banking sector, Iceland replaced its flat tax with a progressive approach and increased its top rate by about 9 percent. 

In response to its public debt crisis, Greece raised its top rate by 5 percent. Portugal and France have raised their top rates by 3 percent and 1 percent, respectively, to address budget shortfalls. In addition, Ireland's top rate increased by 1 percent this year. 

"In the current economic environment, as many countries are faced with increasing budget deficits, they need funding for various economic stimulus packages," said Ben Garfunkel, a partner at KPMG, in prepared remarks. "Our study indicates that many of these countries are levying tax increases on their highest earning taxpayers in order to increase revenue. We also see governments becoming increasingly sophisticated and rigorous in the framing and application of their tax rules." 

Garfunkel also points out that wealthy-wage earners have the ability to flee high-tax jurisdictions for countries that offer lower rates. 

"High income earners typically have the talent and credentials to migrate to countries that have lower personal income tax rates and a need for skilled labor," he said, adding, "Tax authorities are trying to strike the right balance as they face increasing pressure to identify and secure greater revenues, while also trying to attract businesses to set up operations in their country."

While much of Western Europe has increased taxes on their wealthy, average top rates in the Asia-Pacific region declined by 0.4 percent this year. New Zealand and Malaysia have dropped their rates by 5 percent and 1 percent, respectively.