2023-09-03 10:00:58
The organization of developed countries OECD warns that the widespread practice among governments of granting more benign tax treatment to capital income (obtained from interest, dividends or sale of shares) that reduces wages equity of tax systems -since it favors taxpayers with higher incomes- and its collection efficiency (because it opens the door to tax avoidance strategies).
In a study published this week by the OECD, under the title ‘The taxation of labor versus capital income’, the authors analyze the best tax treatment that most countries grant to this last type of income by different ways. This trend has been consolidated since the last part of the last century as a strategy to attract investment to countries or, seen in another way, to prevent their flight to territories with lower taxation in an increasingly globalized world with greater freedom of movement for capital.
The OECD points to Spain as the only EU country where certain capital income can be taxed more than wages
Different ways to prioritize savings
In Spain, since 2006, there is a double scale in personal income tax which includes lower rates for income from capital. So, For examplein general, currently a single taxpayer, under 65 years of age and without children with a gross annual salary of 45,000 euros pays personal income tax with a quota of 9,483 euros (at an effective rate of 21%), according to assumptions estimated by the Registry of Fiscal Advisory Economists (Reaf). However, if another similar taxpayer earns 45,000 income from interest, dividends or from the sale of shares, will pay 2,036 euros in income tax (4.5%). This is so because the scale applicable to capital income is softer than that of labor income.
There is also a double scale model in income tax, similar to the Spanish one, in countries like Lithuania, United Kingdom o USA, as explained in the OECD report.
Instead of designing a progressive scale (with rates that are higher as the income on which they are applied increases), other states choose to apply a single fixed rate to capital income but lower than the marginal rate that applies to capital income. wages (cases of Ireland, Greece, Italy, Japan, Korea o Colombiaamong others).
In countries like Germany, France, Austria o Portugal, taxpayers can opt for the most favorable tax treatment, choosing between a fixed tax rate on capital gains or taxation under a progressive scheme (which tends to benefit people with lower incomes).
There are countries like Chile, Luxembourg, Turkey, Australia, Canada, France, Ireland o United Kingdom where, in addition, capital gains in the form of stock dividends may receive special exemptions or deductions.
And in most capital gains do not contribute to Social Security (nor in Spain).
In one way or another, all these elements mean that, in general, capital income is subject to a lower effective rate than wages.
Greater equity in Spain
The study includes a numerical exercise by which, in each of the different countries, an income is subjected to taxation equivalent to five times the median salary from each of them. And he performs a double calculation to find out how much that income is taxed in each country if it comes entirely from wages or if, otherwise, it arrives exclusively from the capital. (In Spain, the average gross annual salary stood at 25.353,22 euros in 2022, an amount that multiplied by five gives just over 126,000 euros per year).
The OECD concludes that Greece It is the country where capital income obtains the greatest tax advantage, since in the event of an amount equivalent to five times the average salary, they pay the tax authorities 38 percentage points less than in the case of labor income. Latvia, Portugal, Turkey, Luxembourg o Belgium they also provide this high income level with a tax advantage of more than 25 percentage points if earned from capital, rather than wages.
Conversely, the OECD calculation exercise places spain as the only country in the European Union where an income of 126.000 euros it is taxed less if it comes from work than if it comes from capital (after taking into account minimum exemptions, deductions and tax relief). It is a situation that, in the OECD study, also only occurs in Colombia and in Swiss.
In any case, for other income levels, this rule is not fulfilled in Spain, as demonstrated for an annual income of 45.000 eurosFor example.
Strategies to pay less
The OECD study concludes that systems that apply lower taxation to capital income “reduce the horizontal Equity, since taxpayers who earn the same level of income but obtained from different sources are taxed differently.”
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It also happens that, in general, capital income is concentrated to a greater extent among taxpayers with higher income levels, “so those who earn more benefit disproportionately from preferential tax treatment on capital income, which reduces the vertical equityof the tax system.
In addition, the study published by the international organization based in Paris stresses that the differential tax treatment between income from work and income from capital “could open the door to strategies to minimize taxesincluding the transfer of income, the deferral of capital gains and the choice of the strategic moment in which to make the tax income”. So much so that in the report itself it announces a forthcoming OECD work which will delve into how individuals, particularly those with higher incomes, use such ploys to pay less tax. “Future work will also consider the pros and cons of different tax policy options that governments may consider to improve the effectiveness and equity of their personal income tax systems” (the equivalent of Spanish personal income tax), it is stated. .
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