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Comment by ReticentVole | Hacker News Reader

USA Payroll tax: 15.3% combined, first $127,000 only (3.89% effective)

France Payroll tax: 20% for salaries over €151,965.

USA Income tax: 42%, including State (CA) and Federal, excluding deductions

France Income Tax: 50%.

So the labour cost will be a lot higher due to payroll taxes, and the employee will take home less due to income taxes. High VAT (20% in France, 8.5% in SF) means consumer purchases are also more expensive. If you are in Paris, you're at a latitude 48.8N, SF 37.7N.

The same is true for moving to other Anglo countries: UK, Canada, Australia have similar lower-tax regimes.

France, Germany etc. are charging huge payroll, income and sales taxes to fund their huge welfare states and bureaucracies, but in the process ruining their competitiveness.

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San Fran also has over 8k homeless in a population of 800k. The overall homeless rate in France is about 5x lower per capita.

My opinion on paying taxes changed drastically after I visited the USA 2 years ago (San Fran, LA, Vegas). I was absolutely shocked by the amount of poverty I saw and I had never realised that America had such a drastically different culture to Australia.

https://sf.curbed.com/2019/12/19/21027974/san-francisco-home...

For the 2019-2020 fiscal year, San Francisco will spend $364 million on the homeless.

I think there are other major issues besides lack of money from lack of taxes.

For one thing, when comparing per capita, you shouldn't just look at the population of San Francisco. A lot of those 8k homeless people came from other parts of the state or even other parts of the country to San Francisco. This is in large part that San Francisco has nice weather and is relatively welcoming to the homeless compared to a lot of cities and jurisdictions. Whereas in a lot of cities, homeless residents might get a lot of harrassment from the police, in San Francisico for the most part they are left alone.

So when doing per capita homelessness in San Francisco, you probably need to look at a much larger overall population that just that of San Francisco.

That still leaves a 3.5 times higher homeless rate per capita than in France. One third is a lot but it's not the driving force behind homelessness.

>As of 2014, the city was believed to have approximately 7,000 homeless residents.[55][56] As of 2015, approximately 71% of the city's homeless had housing in the city before becoming homeless, while the remaining 29% came from outside of San Francisco. This figure is up from 61% in 2013.

https://en.wikipedia.org/wiki/Homelessness_in_the_San_Franci...

> France, Germany etc. are charging huge payroll, income and sales taxes to fund their huge welfare states and bureaucracies, but in the process ruining their competitiveness

That's a common bashing legend that France/Germany are taxe hell and it is mainly bullshit.

I am currently live in France with salary over 100k and my effective taxe rate is under 20%.

Both France and Germany (and almost every European country) have a gazillion way of reducing legally your taxe bill if you do it right.

Currently, some of my colleagues in Switzerland, a well known taxe heaven, pay more taxe than I do.

And what are those ways?

Off the top of my head... in France, you pay tax as a household rather than an individual. So if you are married with children you get a tax cut for each child up to 3.

Private pension contributions are also tax deductible and don't actually have to be used for retirement (you can use it to fund a first house for example)

Other things that you can take off your tax bill include alimony payments, charitable donations and investments made in certain French initiatives.

So yes, there are many ways to legally reduce your tax bill quite significantly here.

And to add, Randomly out of my mind :

- Owning a flat and rent it to a thrid party. Many fees on it are deductible.

- Investing in medium/small-sized companies.

- Making property/housing more energy efficient.

- Invest in accommodations for disabled/elderly/etc.

- Fees for the studies of your kids.

- Support/Invest in art / creative related enterprise.

- And many other that need to be checked.

That is not exceptional. Many European countries have similar taxes credit schemes.

France is a tax and red tape hell.

As an individual you may be OK re. tax if you are married with children because they give strong tax advantages to those households [basically they count how many people live on your income when calculating income tax], which must be your case.

But overall tax levels are high, taxes are many and complicated, red tape works against you.

> France is a tax and red tape hell.

- Red tape I agree. Administrations are slow and processes cumbersome.

- Taxes I do not agree, France is in the European's average.

France is #1 in the EU for public spending [1]. Deficit is within average and constrained by Eurozone rules (excluding the current mess). Money does not magically appear.

As I said, taxes are many, complicated, and often useless. This of course overlaps with the issue of red tape but is an issue in itself. There is a reason why so many rich French people live in Belgium or London. There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam.

Just another example I've recently found (this is supposed to be abrogated this year): If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending. There are plenty of things like that. This is bonkers.

[1] https://www.statista.com/statistics/263220/public-spending-r...

> France is #1 in the EU for public spending [1].

That's a well known overstatement that comes mainly from the fact Pension system, education system AND health care system are almost entirely state-owned in France. You can find the same pattern in some Scandinavian country btw, France is not an exception.

> There is a reason why so many rich French people live in Belgium or London.

You can say the same with British and American near the Leman-lake /Zug in Switzerland. Fiscal optimization is everywhere.

> There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam.

That's not surprising, Holding companies always love specific countries for legislation/taxes reasons. That include Netherlands, Luxembourg, Switzerland and Ireland. Almost every European major multi-national has an holding in one of these.

> If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending.

That I totally agree with you. This is a good example of terrible case by case politic bullshit.

It is certainly not an overstatement, and the issue of tax goes far beyond what you may see as an individual (for example, overall labour costs [1]). France is not an exception in its organisation, in fact its health care system is LESS state-owned than, say, the UK's. But it spends a lot, taxes a lot, and, to compound the issues, is not flexible.

You seem to actually agree that France has problems with its legislation and tax in the rest of your reply...

Edit: The graph that you posted in you reply below is obviously not the same metric. It states it is "general government" spending while I mentioned "public spending". But even so, your graph shows France ahead of Germany and the UK.

[1] https://ec.europa.eu/eurostat/statistics-explained/index.php...

> It is certainly not an overstatement. As you say, France in not an exception in its organisation, in fact its health care system is LESS state-owned than, say, the UK's.

It is. Especially if you compare with the public spending/GDP collectively [1]. It is currently lower than USA and right in the average of OECD.

> You seem to actually agree that France has problems with its legislation and tax in the rest of your reply...

I totally agree with that. I disagree with the fact it is a taxe hell. In my experience, as a European who lived in several countries including France, it is in the average of Europe.

That said, I agree with you about the red tape / administrative burden.

[1]: https://data.oecd.org/chart/5Zub

Are you including social contributions of employer and employee in your 20% tax rate?

Because these are definitively taxes that should be included.

If yes, I am really curious to know how this is possible

Really the only way as an employee is to have a family because income tax depends on household size. And let's remember that there is a de facto second income tax (CSG/RDS) on top of the income tax.

But this is a small part of the issue with tax. Regarding employment there are the taxes paid by employers, as you rightly point out, which make the cost of labour quite high in France, but there are also all those other taxes on about everything.

> Are you including social contributions of employer and employee in your 20% tax rate?

Only income taxes. The employer taxes are mainly pension / health insurance.

Compare for example with Denmark where the social contributions are close to 0 and the income tax up to 50%.

The total of the employment taxes paid in Denmark is still lower than the total in France.

Denmark seems to be a particular case compared to other OECD countries.

https://en.wikipedia.org/wiki/Tax_rates_in_Europe#/media/Fil...

Yes, I chose this extreme example on purpose to show that evaluating only the income tax is not meaningful.

Unless you are earning above 400k€ per year your income taxes will be less than 42% of your income in Germany. Lets say you are earning SF type salaries in Germany. Something like 150k€ per year. Your income tax will still only be 30% of your income. So why are only 90k€ arriving on your bank account? (60% of your salary). Because medical, unemployment, long term care insurance and pensions are mandatory but also provided by the government in Germany. The effectiveness of these insurances is much lower if only a minority is taking advantage of them.

Imagine extreme examples like everyone who signs up for unemployment insurance is freshly unemployed and once they find a job they cancel their insurance. There is no way to make it work without the government.

You ignored the contribution sociale in France. “Not a tax”-tax

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