Many people are beginning to wrap their minds around the House Republicans’ proposed destination-based cash-flow tax and what it means for tax reform. Most people are still looking into the tax’s impacts on trade and how...
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- France to Begin Income Tax Withholding in 2018
France to Begin Income Tax Withholding in 2018
As an employee in the United States, it is understood that throughout the year, your employer will take a little bit of your income from your paycheck and remit it to the government as taxes. The amount your employer sends to the government depends on how high your income is, whether you are married, and how many dependents you have. This is called income tax withholding and has been part of the U.S. income tax system for many decades.
While the concept of income tax withholding seems like a given in the United States, France has never had a system that required employers to withhold income taxes from their workers’ paychecks (Social Security payments in France are currently withheld). Instead, individuals in France need save up throughout the year in order to pay their income tax by September for the previous tax year (there are options for monthly installments).
Come 2018, France will join the United States and most other industrialized nations by implementing income tax withholding. That year, French employers will begin withholding their employee’s income tax and sending it directly to the government.
Interestingly, some French government officials are billing the transition as a “tax free 2017.” This is because in 2018, the year in which withholding begins, individuals will not need to make an income tax payment in September as they normally would.
Of course, this claim is silly—the tax will be paid by the employer that year on behalf of the taxpayer. The only benefit Individuals will receive is that they will no longer need to save money to pay their tax bill. The trade-off is lower take-home pay each paycheck.
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