COSTS OF DOING BUSINESS IN THE US

Please note that the guidance below is not a substitute for professional legal and/or tax advice. Any tax advice contained in the body of this e-mail is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

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The two most common misconceptions regarding doing business in the US have to do with paying less income tax and less employment tax. Below is a quick reality check:

INCOME TAXES

True/False:  The American dream lives on and income tax rates are low.

Aspects of those statements are arguably still true. However, the US is far from a tax-haven. French entrepreneurs are almost always taken by surprise when they find out that corporate tax rates (and individual tax rates) are not so different from those imposed in France, especially when one considers both the federal and state taxes imposed. With government-changes every 4 years and corresponding tax reforms at every turn, the US can be counted on for both high tax-rates and unpredictability.

LABOR

True/False: Employment taxes are less in the US than in France.

This question does not have a simple answer. Merely isolating and comparing those costs does not tell the whole story. Many benefits provided by the government in France have to be paid for by employers in the US. Employees everywhere in the US desire just as much as employees in France. Accordingly, much more has to be provided by employers. Competitive US employers are generally responsible for funding many supplemental benefits, such as the following:

• Medical, dental & vision insurance
• Unemployment insurance
• Workers’ compensation insurance
• Short-term disability insurance
• Retirement plan options, such as a 401(k) plan