elpais.com
Spain's 'Cold Progressivity': €9.75 Billion in Unintended Tax Revenue
Spain's inflation from 2021 to 2024 created a 'cold progressivity' effect, generating €9.75 billion in extra tax revenue due to non-indexed income tax brackets, disproportionately impacting middle-income earners who paid an average of €458 more.
- How did the impact of 'cold progressivity' vary across different income groups in Spain?
- This 'cold progressivity' disproportionately affected middle-income earners in Spain, who bore 61.3% of the price increase impact between 2021 and 2024. This group constitutes 59.7% of tax filers and contributed 57.8% of the tax revenue. The average impact per taxpayer was €311 for lower-middle incomes, €458 for middle incomes, and €622 for high incomes.
- What is the financial impact of Spain's 'cold progressivity' on taxpayers and the government?
- Spain's inflation since 2021 has led to a phenomenon called 'cold progressivity,' where taxpayers are pushed into higher tax brackets without a real increase in purchasing power. This resulted in €9.75 billion in extra tax revenue between 2021 and 2024, impacting middle-income earners most significantly.
- What are the long-term implications of Spain's failure to adjust income tax brackets for inflation?
- The cumulative effect of Spain's inflation and non-indexation of income tax is projected to continue, raising the tax burden for middle-income households by approximately €200 annually if inflation remains around 2.5%. This 'silent tax' caused by cold progressivity impacts taxpayers across income levels but is less politically visible than explicit tax increases.
Cognitive Concepts
Framing Bias
The article frames the issue primarily from the perspective of those negatively affected by the 'cold progressivity' of the IRPF, focusing on the increased tax burden on middle-income earners. While it mentions the government's arguments against deflation, the framing emphasizes the negative consequences of not adjusting the tax brackets for inflation. The use of terms like "silent tax" reinforces this perspective.
Language Bias
The language used is generally neutral and objective, using data and statistics to support its claims. Terms like "silent tax" are used, but it's clear that the article intends to describe the unnoticed nature of this tax increase, rather than using it to express opinion. There is an objective tone and a transparent use of sources.
Bias by Omission
The article focuses heavily on the impact of inflation on middle-income earners, providing specific figures and analysis. However, it could benefit from mentioning alternative viewpoints on the 'cold progressivity' phenomenon and potential counterarguments to deflating the IRPF. While it mentions the government's rejection of deflating the IRPF and their alternative measures, a more in-depth exploration of these arguments would provide a more balanced perspective. The article also briefly mentions the Banco de España's projections but doesn't elaborate on their methodology or potential limitations.
False Dichotomy
The article presents a somewhat simplified dichotomy between deflating the IRPF and not deflating it, overlooking the nuances and potential compromises. While acknowledging the government's concern about benefiting high-income earners, it doesn't fully explore the possibility of targeted measures or alternative solutions that address this concern. The discussion primarily frames the issue as a binary choice between these two options.
Sustainable Development Goals
The article highlights how inflation and the lack of tax adjustments disproportionately affect middle-income earners, increasing their tax burden without a corresponding increase in purchasing power. This exacerbates existing inequalities, as the higher tax burden falls more heavily on those already struggling to maintain their living standards. The increased tax revenue collected from middle-income households without corresponding improvements to their quality of life directly contradicts the goal of reducing inequalities.