Time and again, year after year, regardless of any economic justification, the right recommends lowering taxes, whether we’re going through or coming out of a crisis, whether we have a larger fiscal deficit or need to strengthen basic public services. as a universally valid description, although its effects are far from what it preaches. As a matter of fact, the tax cut became the electoral talisman that the People’s Party swung repeatedly when it wanted to reach the Government, and then forgot about the prohibition of such fiscal deficits, which it insisted upon.
That we’ve entered a gigantic economic recession like the one we had in the last financial crisis? The right does not stop asking for tax breaks. That we have succeeded in initiating the economic recovery? Well, to lower taxes too. Is it that a historic epidemic with never-before-seen consequences requires the State to double down on the protection and care system for those most affected? Well, taxes should also and quickly be lowered, although they are increasingly not discouraged from asking for help for the economic and professional sectors. An eruption of a volcano, a power outage, or a trucker strike? There is nothing better than lowering taxes. And of course, if we enter an uncertain scenario of the energy crisis, war at the gates of Europe, rising raw material prices, and disruption to global supply chains, then more reductions and reductions are demanded more persistently if possible. taxes as the sole answer to global problems of extraordinary complexity.
There are many figures and statistics on taxes and taxation that can be used to show that Spain is not the country with the greatest financial pressure in Europe, as some lie dealers sometimes preach. Just the opposite. According to the 2021 data of the European Statistics Office (Eurostat), Spain ranks last among 27 European countries in terms of the percentage of taxes paid by households, with 14.1 percent, while Spain ranks last with 14.1 percent. As a result of the financial pressure, understood as the total set of taxes and social contributions related to GDP, Spain will rank 20th, well below the EU average of 35.4% to 41.1%.
What is striking is that those who advocate removing public resources from the state and reducing basic services by reducing taxes never propose other measures, such as tax contributions more than capital income, as this is actually one of their goals. Eliminate far less than labor income, tax avoidance, or illegal financial flows, or collect more from the very rich and ultra-rich as other countries do. How strange that those who propose to lower taxes always forget to mention those who, in many cases, and through complex financial engineering processes, have amassed the greatest fortunes that have avoided paying taxes for years.
As noted Yanis Varoufakis, economist and former Greek Minister of Economy, economics is “ideology by equations”, no more, no less. Thus, a review of the scientific evidence on tax cuts that has emerged recently is inconsistent with those who baselessly argue that it is a way to stimulate the economy by allowing spending to increase. .
Indeed, the German economist sebastian gechertTogether with the Austrian researcher from the Düsseldorf Macroeconomic Policy Institute Philipp HeimbergerThey published an interesting report from the Vienna Institute for International Economic Research in which they analyzed 441 different estimates applied to 42 core studies of tax cuts in different countries, with particular reference to corporate tax. According to Gechert and Heimberger, tax cuts made especially for companies did not have a positive effect on economic growth.
Earlier, two researchers from the London School of Economics’ International Inequality Institute, David Hope Y Julian LimbergThey published the report titled ‘.Economic Consequences of Big Tax Cuts for the Rich”, arrives at a conclusion similar to that of Professors Gechert and Heimberger: From 1965 to 2015, tax cuts, especially for the richest, in 18 OECD countries neither boosted economic growth nor lowered unemployment rates. On the contrary, in all cases studied, there was an increase in inequality and significant growth in social inequality in all analyzed countries that applied these tax cuts.
Naturally, Spain needs a comprehensive fiscal reform that corrects the shortcomings of a tax system that pays wages to the State with a tax contribution for the benefit of rentiers and large corporations operating with zero or very low taxes. But without draining the basic resources of the State, as the right claims. This new tax policy will improve collection, increase redistribution and prevent the tax evasion that currently exists in Spain. It has nothing to do with the hasty announcement of tax cuts for purely partisan purposes.
Source: Informacion
Barbara Dickson is a seasoned writer for “Social Bites”. She keeps readers informed on the latest news and trends, providing in-depth coverage and analysis on a variety of topics.