Taxes and I

After more than 30 years devoted to the study of taxes, what idea do I have of  the workings of the tax system in Spain?

Well, the first thing I note is that, at the top of the social ladder, the rich do not pay taxes. Governments have decided it is better to have the capital - most notably financial - are home, even without paying taxes, than to see it flight elsewhere. While at home, it creates jobs. The motto seems to be: "we must not crowd out capital, there is much competition". In Spain there are a couple of institutions that are going in this direction: Investment Companies with Variable Capital (SICAVs), which are taxed at 1% and the ETVEs (foreign securities holding companies) which are not taxed on the profits of foreign sources. With the first, break free the likes of Amancio's, Koplovitz's and those listed in Forbe's. With the latter, multinational holdings with business abroad. Unfair? Yes, but that's what is happening elsewhere. I am of the opinion that rich are necessary to keep the poor illussioned they may one day make it.

The second thing I note is that the bottom of the social scale - small selfemployed businessmen, - opaque money is flowing smoothly, especially in professions that are paid in cash. For instance, my Dentist. Studies say the underground economy is 30% of GDP (the Treasury, who knows these data, keeps them secret, not to demoralize taxpayers). The attitude of the Gorvernment is called in ornitology BDFA "bills down face away".

Who pays the taxes, then? Those who are on a payroll and final consumers. For the first, tax is automatically withheld from the paycheck,, and the latter are charged VAT when they spend their money and avoidance is impossible because they are last of the chain. Have you guessed that they are taxed twice? You guessed right, they are.

Is the system sustainable? It seems so.

Are there alternatives? Tell me a few.