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View Full Version : France High Court Upholds 75% Tax Rate



Alonso
01-04-2014, 04:07 AM
http://weaintgotnohistory.sbnation.com/2014/1/1/5254722/french-court-upholds-75-tax-rate-will-likely-mean-a-very-busy-ligue-1

The newly upheld French tax rate likely means that this season, or for sure next season, there will be a mass exodus of Ligue 1 talent.

Any one here familiar with Ligue 1, and more importantly, who should TFC be looking to poach?

Not only are the players paying 75%, but the clubs/employers are also taking a hit making it a double whammy!

This has to be the highest tax rate in the world for any segment of the population... what could they possibly be thinking?

How many business' will take up and leave?

Off topic: Is France doomed? Or will the country re-adjust to business as usual?

Parkdale
01-04-2014, 08:17 AM
[QUOTE=Alonso;1630495
Off topic: Is France doomed? Or will the country re-adjust to business as usual?[/QUOTE]

I've been following the French league for years now, and this whole situation is absolutely crazy.

I feel that the end result will be a devaluing of the league simply because it will become dominated by 2 clubs - PSG and Monaco (fuck Monaco, more on that later). The big clubs with huge foreign investment like PSG will be able to pay the taxes easily, but the rest of the established clubs like Marseille, St. Etienne and Lyon will suffer big time.

There's really two taxes in play here - the millionaires tax that will effect the players (which the lefty socialist in me kinda approves of) and the tax on the club. This tax is pure bullshit because the clubs are being taxed on losses! If you're paying €50Million on player salaries, that money is going out the door. It's completely unfair to have to pay a tax on top of that! Pay more tax on the revenue, but not on the losses.

any for the real kicker - Monaco (fuck Monaco). The tax haven is exempt from salary tax, so they can spend WAY more money than any other team. This is why their currently in 2nd spot. Pretty much every other team in Ligue 1 has complained about how unfair it is that Monaco gets a tax free ride, and Monaco thumbs their nose and plays on. There was talk of every Ligue 1 team boycotting Monaco matches, to which Monaco responded "If you forfit, we get the point and will win the title because you didn't play". A lot of people think Monaco should go play in Italy.


but back to the original question - there's a ton of talented players that will be bought up cheap. I could see some players like Gomis and Gignac making the move. PSG and Monaco (fuck them) will always pay to play, so don't expect to see Zatlan or Falcao going anywhere because of tax.

Kaz
01-04-2014, 08:46 AM
It will be interesting to see. Interestingly Most nations hovered around the 70% mark until the 80s, during Thatcher and Reagan. In Portugal it is about 55% but there is also a Payroll tax that is fairly high and means you get taxed about 65%.

The French tax may actually be a payroll taxes which lowers income, which I think has always been really high so it may not actually be as big a deal as people think.

It will be interesting to see.

Shakes McQueen
01-04-2014, 10:28 AM
The real scandal is what PSG and Monaco get away with, despite belonging to the same league as everyone else.

- Scott

Whoop
01-04-2014, 10:49 AM
Zlatan to TFC!

ManUtd4ever
01-04-2014, 10:55 AM
Wow. Free post secondary education, free health care, and 6 weeks mandatory paid vacations are not worth a 75% income tax rate.

France is about two steps away from all out Communism.

CretanBull
01-04-2014, 11:12 AM
The tax isn't as bad as it's being made out to be. For starters, the current high-end tax rate was 66% and that only kicks in on income over 1 million euros. 50% of the increase is to be paid by the employer, it doesn't come off the employees paycheck at all and the total tax out-put by a company can't exceed 5% of it's turnover.

Its sensational because even the so-called 'liberal' media have been trained to attack anything related to tax increases, but the reality is that this is a 9% tax increase where the employee only pays 4.5% of that and the company is protected from getting destroyed by a 5% cap on taxes.

CretanBull
01-04-2014, 11:33 AM
Just reading up on the version of the Bill that was passed....the full amount (not just 50% as I stated above) is payable by the employers so it doesn't affect the player's incomes at all and the total amount payable is still capped at 5% of total revenue...and the Bill expires after 2 years.

This is just a bunch of Billionaires crying foul.

Kaz
01-04-2014, 11:47 AM
Wow. Free post secondary education, free health care, and 6 weeks mandatory paid vacations are not worth a 75% income tax rate.

France is about two steps away from all out Communism.

This is the Extremely high rate. The regular high rate was about that high in the US right up until the 1980s (rate after the war it was 94% on income over $200 (2.5million today))

The other thing to keep this in mind... this isn't if you make 1.1 million euros you get taxed 75%. There is a bunch of stuff that isn't being taken into account.
Even if it was a new tax bracket if you make 1.1 Million Euros you'd still get taxed just like every one else.
0% on 6k
Below €60110%
From €6011 to €11991 5.5%
From €11991 to €26631 14%
From €26631 to €71397 30%
From €71397 to €151200 41%
From €151200 to €1 million 45%
Above €1 Million 75%

That means on a €1.1 Million Euro Salary you would pay €505,000 in tax before deductions. (€430,000 on the income up to 1 Million)

On a 5 Million Salary it would be more €3,430,000 instead of the old rate which would be €2,230,000 in tax. (they end up losing €1.2 Euros a year)

Just for some perspective and that is all before deductions and the like with lowers it significantly.
Of course as has been mentioned it isn't a normal income tax, and it is still just on income over 1 million which is coming off the pay role tax if I understand.

CretanBull
01-04-2014, 11:52 AM
^ The employer pays the new tax rate, not the employee. The players new tax bill is €0 higher than it was last year.

Richard
01-04-2014, 12:34 PM
It will be more like clubs needing to sell players because they cant afford the taxes. If no extra tax is being forced onto players you wont see them wanting to leave.

CretanBull
01-04-2014, 12:53 PM
The new tax is capped at 5% of team revenues - regardless of what the actual total is - so this is a worst case scenario of a 5% tax raise for 2 years. If you're a poor club, 5% of your revenues is going to be a very small number. It's the most profitable clubs - the ones that can afford it - that will get hit the hardest.

Kaz
01-04-2014, 02:01 PM
^ The employer pays the new tax rate, not the employee. The players new tax bill is €0 higher than it was last year.

I used a regular income tax model to show even if it were how people thought it was it still isn't as bad as it has been made out to be. I edited the post almost right away to reflect that, because you are right it's not income tax it's payroll tax on the unseen portion and it still is only 50% plus other things.

It is no big deal.

CretanBull
01-04-2014, 08:39 PM
It is no big deal.

It really is nothing. The media -even the supposedly liberal media (because it's all corporately owned)- are well trained to freak out and portray anything involving the raising of taxes as the worst thing that could ever happen, but the reality of this tax hike is that it will be a maximum 5% tax increase that will only affect the teams (and corporations) who's profit levels are high enough to hit that 5% threshold.

Most analysts show that it will only affect the employers of a few thousand people in all of France. It's largely a symbolic gesture that will have very little impact (good or bad) on the French economy.

Parkdale
01-07-2014, 05:19 PM
It's the most profitable clubs - the ones that can afford it - that will get hit the hardest.

PSG has more money than the Pope, and Monaco is a cheat, so the clubs that will actually feel the pinch are the ones without the huge revenues.

Marseille is big, but not outlandishly so. Lyon, St. Etienne, Bordeaux, Montpelier, Toulouse are the ones that will suffer in the long run because they can only afford to play for 3rd or 4th spot. While some clubs in France will play for the championship, most will just be playing for the Champs/Europa spot.

CretanBull
01-07-2014, 06:00 PM
PSG has more money than the Pope, and Monaco is a cheat, so the clubs that will actually feel the pinch are the ones without the huge revenues.

Marseille is big, but not outlandishly so. Lyon, St. Etienne, Bordeaux, Montpelier, Toulouse are the ones that will suffer in the long run because they can only afford to play for 3rd or 4th spot. While some clubs in France will play for the championship, most will just be playing for the Champs/Europa spot.

No one will be hurt (in a significant way) from this.

The two most important things to realize is that the total tax paid out is capped by the team's revenues - it maxes out at 5% - and that the tax itself expires after 2 years. So in the absolute worse case scenario is that teams will pay a 5% tax for two years, and then things go back to how they were.

The big clubs will get hit worse than the small clubs because the smaller clubs won't (or aren't likely) to have the revenues to hit that 5% threshold.

I'll use totally fictional numbers to illustrate my point...

Say St. Etienne's accountants do all the math and they come to the conclusion that under the new tax laws they owe the French government $50, but this St. Etienne's revenues were only $200. So they don't actually pay the $50 that they owe, they only pay $10 because regardless of the amount owed, it can't exceed 5% of revenues. So on their $200 they pay $10 - it's still a lost, but it's not going to change anything significantly...and you won't sell players because a player sold = revenue which ups what you owe. So for the next two years profits at St. Etienne are 5% lower than they should be.

Now Bordeau does the same thing, and they realize that they owe $30. But they had a horrendous year and lost money. They don't pay any tax at all because 5% of 0 (or a negative number) is 0.

On the other hand, PSG's accountants calculate that they owe $200, and because it's a giant team they had revenues of $5,000. PSG have to pay it all because their revenues were so high that they're on the hook for a tax totally up to $250 (5% of 5,000).

And Monaco are still cheats g:D

The point is, that regardless of what the new laws say that they'll have to pay in taxes - they'll only actually have to pay them if they have the revenues to justify the tax bill.

Cashcleaner
01-08-2014, 12:36 AM
I've been following the French league for years now, and this whole situation is absolutely crazy.

I feel that the end result will be a devaluing of the league simply because it will become dominated by 2 clubs - PSG and Monaco (fuck Monaco, more on that later). The big clubs with huge foreign investment like PSG will be able to pay the taxes easily, but the rest of the established clubs like Marseille, St. Etienne and Lyon will suffer big time.

There's really two taxes in play here - the millionaires tax that will effect the players (which the lefty socialist in me kinda approves of) and the tax on the club. This tax is pure bullshit because the clubs are being taxed on losses! If you're paying €50Million on player salaries, that money is going out the door. It's completely unfair to have to pay a tax on top of that! Pay more tax on the revenue, but not on the losses.

any for the real kicker - Monaco (fuck Monaco). The tax haven is exempt from salary tax, so they can spend WAY more money than any other team. This is why their currently in 2nd spot. Pretty much every other team in Ligue 1 has complained about how unfair it is that Monaco gets a tax free ride, and Monaco thumbs their nose and plays on. There was talk of every Ligue 1 team boycotting Monaco matches, to which Monaco responded "If you forfit, we get the point and will win the title because you didn't play". A lot of people think Monaco should go play in Italy.


but back to the original question - there's a ton of talented players that will be bought up cheap. I could see some players like Gomis and Gignac making the move. PSG and Monaco (fuck them) will always pay to play, so don't expect to see Zatlan or Falcao going anywhere because of tax.

A friend brought this up in a conversation with me about Ligue 1 and I couldn't believe my ears when I heard it. I'm assuming the league will try to do something to sort that scenario out, because every other club in L1 is just is not going to put up with that huge disparity in favour of a single team.

cmonyoureds
01-08-2014, 12:27 PM
The upper echelon players won't care. For many of them, PSG/Monaco f** them (did I do that right?) or City/Chelsea doesn't really matter. They'll go where the money is, and the PSG/Monaco's will still pay them. I could see it affecting the second and third tier players. You take profits from clubs and they will recoup it somewhere. I can see those salaries stagnating or dropping slightly. If that happens we could see some players looking to other leagues, including MLS, for higher wages. Ligue 1 could well turn into Scotland/Spain situation.........

Just re-read Cretanbull's post.....sounds like nothing to see here......