We can starts the machinery of his tax on great fortunes. Pablo Iglesias’ party will take advantage of the Congressional Commission on economic reconstruction due to the coronavirus crisis to try to carry out a tribute that it has been raising for more than a year. It is a wealth tax, which would come to replace the current Wealth Tax and with which it has calculated that it could raise up to 1% of GDP, about 11,000 million euros.
His plan is to tax taxpayers with assets that exceed one million euros, exempting only the usual residence of up to 400,000 euros. The tax will be progressive and will be established in the following 4 sections:
- 2% for net assets from 1,000,000 euros.
- 2.5% for those with more than 10,000,000 euros.
- 3% from 50,000,000.
- 3.5% from 100,000,000.
To justify its approval in the midst of a pandemic, Pablo Iglesias has baptized it as reconstruction rate, although its characteristics are the same as those included in the Podemos economic program. According to party estimates, “most of the tax” will fall “on the 1,000 highest patrimonies of the country”. This figure is well below the 202,437 people who declared for the Wealth Tax in 2017 (latest available data), with an average of 3 million euros. Of that amount, 53,000 people in Spain declared an equity of more than 1.5 million euros. Still, if the Podemos account were correct, to collect those ambitious 11,000 million euros, the State would have to charge to each wealthy taxpayer a whopping 11 million euros on average, so it is quite likely that those affected used all the tools available to them to avoid tax increases.
Tax centralization
But with his approval, Podemos would not only be trying to increase the revenues of the state coffers, the purple formation would be done with the control of a tax totally assigned to the CCAA. “This tax will replace the current Wealth Tax, which is inoperative, and cannot be subsidized by the autonomous communities,” they explain themselves.
So, with this measure, what Podemos intends to wipe out a key autonomic competition at the fiscal level. The CCAA Financing Law has given the regions the ability to decide on the minimum exempt from Wealth Tax, on the type of tax or on their deductions or bonuses, but with the reconstruction rate de Iglesias, it would be the State that would determine what wealth taxes are paid.
The Wealth Tax taxes all the assets and economic rights of the natural person, and although it is the regions that choose which taxation to establish, it has the following peculiarities at the state level, according to the REAF in its latest report on autonomous taxation:
- There is an exemption of 300,000 euros for housing habitual of the taxpayer.
- There is a minimum exempt of 700,000 euros, although some Autonomous Communities have it below, such as Aragon (400,000 euros), Catalonia and Extremadura (500,000 euros) and the Valencian Community (600,000 euros).
- There is an obligation to file the return for taxpayers whose tax quota results to enter or, not leaving to enter, if the value of the goods and rights exceeds 2,000,000 euros.
- The following rates are established, unless the community regulates another:
In the Community of Madrid you don’t pay
The Community of Madrid is the only Spanish region that has a 100% discount on this tax, so no one in this territory has had to pay anything for Heritage since 2008. The ineffectiveness, distortions and duplicities generated by this tax led the Government of José Luis Rodríguez Zapatero to abolish it in 2008 at the state level, but in 2011, in full economic crisis, the same Executive decided to recover it.
Thus, if the tax on Iglesias’ great fortunes prospers, Madrid taxpayers will be the most affected by its implementation. In 2017, there were 18,132 respondents for this tribute in the region, with more than 9 million euros on average. In this sense, La Rioja also stands out because it applies a 75% bonus to Heritage.
In the following table, you can see how each region taxes the Patrimony of its inhabitants (excluding the 300,000 euros exempt from habitual residence and without the taxpayer having any kind of disability). For example, for an estate of 800,000 euros (which may represent a second residence) in Aragon, the tax is 1,164 euros, in La Rioja 50 euros, while in Madrid nothing would be paid.
For an equity of 4 million euros, Madrid citizens would not have taxation either, while Extremadurans would have to pay the Treasury 59,919 euros. In the case of assets of more than 15 million euros, most regions have taxes of more than 200,000 euros, with Extremadura being the most taxable at 418,155 euros.
It only remains to convince the PSOE
The Podemos proposal is on the table, but does not seem to like the Minister of Finance, María Jesús Montero, which has already spoken several times in recent weeks against approving new taxes, so we would be facing another discussion within the Executive. Montero would be more in favor of raising Successions or Patrimony in regions that have low taxation, instead of creating a new fiscal figure. In 2017, the regions raised 1,111 million euros for Heritage, so the Podemos proposal would mean multiplying the collection by 10, which would be quite unlikely.
Asked about the differences with the PSOE in this field, the spokesman for Unidas Podemos, Pablo Echenique, ventured to ensure that taxing large fortunes more is one of the “broad consensus” of society because “more than half of the Spaniards would be in favor of a wealth tax. ” Echenique also took the opportunity to go to Madrid, noting that the current Wealth Tax “allows communities, such as Madrid, to become a kind of internal tax havens and tax dumping the others, discounting this tax. “Now, all that remains is to convince the PSOE.
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