Robin Hood tax recklessness

There is plenty of evidence of the extraordinary distortions that Pedro Sanchez’s government’s fiscal policy creates in the economy. One thing is that the government has decided to stop its tax reform – the experts’ white paper sleeps in the drawer where Minister Maria Jesus Montero put it – and the other is that Sanchez wants to turn Spain into the Sherwood Forest, where it is Robin Hood who steals from the rich to give to the poor. This strategy, necessary for its political purposes, has serious consequences because it interferes with the economy, distorts the dynamics and processes and creates vices that make the operation of the system more efficient. We have known in the past hours two symbolic cases. On the other hand, ABC compiled, according to large transport employers, that one of the factors that may be behind the strike being brewed is the fear of independent carriers to leave the unit system and suffer tax levies that set their size between 6000 and 8000 euros. In order to survive in taxes by units, it is not necessary to exceed 125,000 euros in annual bills, so in the penultimate month of the year this limit may be an incentive to turn off the engines. Another distortion was denounced on Tuesday by Fedea director Angel de la Fuente. The government agreed to reduce personal income tax for low-income earners, a decision that cannot be compensated in principle. This measure helps preserve the income of the most vulnerable and does not cheat the price signal sent by the new power mode. But the problem, as de la Fuente asserts, is the mechanism chosen for applying the discount, which “can be clearly improved”. It was decided to reduce the tax base, increase the amount of the reduction on income from work between 14,000 and 21,000 euros. The problem is that this design raises the effective marginal tax rate to 50% for an income bracket of around €20,000. “More than half of what you earn in addition, they take from you,” de la Fuente explained, noting that this measure raises the margin from these income levels to figures that do not apply even to the richest people in the country. Come on, Sanchez wants to be Robin Hood and only gets to be the ‘mayor’ of Nottingham. [email protected]

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