A lot of friends ask me about taxes in France. Some are merely curious and others are dreaming about a little place of their own here one day. Well, the simple answer is that the tax system is uncomplicated for most people, and almost no one needs an accountant to file for them. Of course if you’re in the league of Donald Trump you will definitely need some help, and a good sized law firm.
On our little apartment (original cost of a bit more than $200K) we pay an annual property tax of less than $500, plus another $140 for our TV. Yes, they do tax televisions here, and if my French is to be trusted, it has everything to do with supporting public broadcasting, which is important here. We receive a bill once a year and pay the tax on-line directly from our bank account. Income tax is a simple two-line, three or four question affair that is filed in April. The fiscal authorities figure out the tax and we pay in four equal installments for the coming year, based on last year’s tax. All of this is done on-line. It is the most efficient, easy-to-use tax system I can imagine. We pay at the 14% rate here, but the government allows very small enterprises like our apartment rental to claim an automatic 50% deduction for business expenses, making our effective rate about 9%. When we file in the U.S. and pay our home country taxes, we have a choice of claiming an itemized deduction or a credit for what we pay to France.
All you European travelers understand that everything you buy here, from a scarf to a pizza has a value added tax (VAT) already included in the price. It can range from roughly six percent up to twenty. Restaurants meals are taxed at 10% for example, and luxury goods at the highest rate. The VAT finances most of the government and its public services. It is similar to, but different than, a sales tax. What I like about it is that I don’t have to do the math when I order a meal, rent a hotel room, or shop. The price is all inclusive and relatively painless. If the pasta dish says twelve euros on the menu, that is the total price. Well… except for in Italy, where they manage to add a small fee called a copperto to cover bread, butter, napkin, whatever. It’s one of the reasons we love the Italians. They are so creative.
Yes I know, the United States isn’t Denmark, or France, or anyplace else. There are reasons why we have the system we do, and why we seem so unwilling to elect people who will give us something more reasonable. Those reasons escape me at the moment – thinking, thinking – not coming to me yet. Maybe in a future post. The long and the short of it is that we don’t have to become like Europe to have a fair and decent tax system. It can be our own creation. It just needs to be simple and progressive.
