EXCLUSIVE – Manuel Valls announced the elimination of the first tranche of the income tax. The threshold of the second tranche will be reduced from 11,991 to 9,690 euros. 9 million households will be winners, at a cost of 3.3 billion
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The air of nothing, the tax reduction announced Wednesday morning by Manuel Valls for low-income households and middle classes will upset the income tax. The Prime Minister referred to the removal of the first phase – the 5.5% for income between 6011 and 11,991 euros – for the 2015 tax But this measure will have a cascading effect on other groups. Explanations.
What is the removal of the first tranche
Delete the first tranche of the scale is to back the threshold input in taxes. Today, households are taxed from 6.011 euros in net income per year. After the reform (the thresholds being changed), they will be only from 9690 euros. However, from this income level, the tax rate jumps to 14%. This creates a significant threshold effect for the households concerned, the government will seek to correct.
| Tax Schedule 2014 | |
| Income Group 2013 (quotient familial) | Tax Rate 2014 (Schedule 2014: TMI) |
| Up to 6.011 euros | 0% |
| from 6011 to 11,991 euros | 5.5% |
| from 11,991 to 26,631 euros | 14% |
| from 26,631 to 71,397 euros | 30% |
| of 71,397 to 151,200 euros | 41% |
| Greater than 151,200 euros | 45% |
| The new scale | |
| News slices | Tax rate |
| Up to 9,690 euros | 0% |
| from 9690 to 26,764 euros | 14% |
| from 26,764 to 71,754 euros | 30% |
| of 71,754 to 151,956 euros | 41% |
| Over 151,956 euros | 45% |
Who will be affected
The objective of the measure is to target low-income households and middle classes, with an overall budget of EUR 3.3 billion. delete But the first installment will benefit mechanically to all taxpayers: households taxed at 14%, 30%, 41% or 45% will also benefit from the measure of the fraction of income included in the first tranche, however, the executive wants the measurement target. households up to 30% the portion only, those with revenues of 26,764 euros per share at most.
The Executive will therefore partly offset the effects of this measure lowering the threshold for the second tranche (14%), which will increase from around 12,000 euros to 9,690 euros. This lowering of the threshold sufficient to offset almost entirely the effect of the removal of the first installment for the highest earners. The taxpayers in the current second tranche (14%) remain however win with anything under: improving the discount (see below). Further installments will simply revalued the level of inflation (0.5%).
How many households will gain
The measure announced for 2015 will benefit nearly 9 million households in all, of which 3,000,000 will be totally exempt from income tax. She will take over the tax of EUR 350 voted down this year and will be much more powerful because it has benefited 4.2 million households, of which 2,000,000 have been completely exonerated.
Tax wealthier Will it increase?
No. The measurement should result in relief for the poorest, but not to higher costs for others. This “reprofiling” of the scale should just allow to neutralize the effects of the removal of the first installment, not to raise taxes on high incomes.
How to avoid threshold effects to the input tax
To prevent households be brutally imposed on 14%, the haircut, a mechanism of “smoothing” which makes entry into the most progressive tax will be increased and “conjugalisée” for the first time. It will rise to 1,135 euros for a single and 1,870 euros for a couple.
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