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The Spanish income tax reform of 2015: analysis of the effects on poverty and redistribution using microsimulation tools
Nuria Badenes-Plá 
José María Buenaventura-Zabala
José María Buenaventura-Zabala
Affiliation: Institute of Fiscal Studies, Madrid, Spain
 0000-0002-7468-552X
Preliminary communication | Year: 2017 | Pages: 315 - 333 | Volume: 41 | Issue: 3 Received: June 21, 2017 | Accepted: July 6, 2017 | Published online: September 15, 2017
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FIGURES & DATA
REFERENCES
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Source of income withholdings: | 2014 | 2015 | 2016 | Labour income | 65,707 | 61,645 | 58,888 | Income from capital | 4,896 | 4,663 | 4,430 | Leases of urban real estate | 1,543 | 1,470 | 1,396 | Economic activities | 3,589 | 3,418 | 3,247 | Capital gains | 325 | 310 | 294 | Total | 76,060 | 71,505 | 68,255 |
Source of income withholdings: | 2015 vs 2014 | 2016 vs 2014 | Labour income | 4,062 | 6,819 | Income from capital | 233 | 466 | Leases of urban real estate | 73 | 147 | Economic activities | 171 | 342 | Capital gains | 15 | 31 | Total | 4,555 | 7,805 |
Source: Authors’ calculation using Spanish Tax Agency data.
Individual taxation 2016-2014 | Income amount | No
children | One
child | Two
children | Three
children | 2 chi. 1
disab> 33% | 2 chi 1
disa> 65% | 12,000 | 100 | 100 | | | | | 15,000 | 23 | 27 | 34 | 158 | 215 | | 20,000 | 14 | 15 | 17 | 51 | 81 | 153 | 25,000 | 12 | 13 | 14 | 33 | 52 | 74 | 30,000 | 9 | 9 | 10 | 23 | 36 | 46 | 100,000 | 7 | 7 | 7 | 9 | 11 | 11 | 150,000 | 7 | 7 | 7 | 8 | 9 | 9 |
Note: The last two columns (6 and 7) refer to families with two children, one of them with a level of disability greater than 33% or 65%, respectively. Source: Authors’ calculation using Spanish Tax Agency data.
Joint taxation 2016-2014 | Income amount | No
children | One
child | Two
children | Three
children | 2 chi. 1
disab> 33% | 2 chi 1
disa> 65% | 12,000 | | | | | | | 15,000 | 22 | 77 | | | | | 20,000 | 18 | 24 | 39 | | 826 | | 25,000 | 12 | 15 | 19 | 134 | 191 | | 30,000 | 11 | 12 | 14 | 65 | 103 | 317 | 75,000 | 9 | 9 | 9 | 16 | 22 | 27 | 100,000 | 7 | 7 | 7 | 11 | 15 | 18 | 150,000 | 7 | 7 | 7 | 9 | 11 | 13 |
Source: Authors’ calculation using Spanish Tax Agency data.
| Tax revenue | Final net income | 2011 | 65,485 | 411,191 | 2016 | 62,606 | 414,070 | Absolute difference | -2,878 | -2,878 | Percentage difference | -4.4 | 0.7 |
Results 2011 | Income net of tax | Final net income | Gini (pre-tax income) | 0.42343 | 0.42318 | Gini (after-tax income) | 0.37998 | 0.37953 | Reynolds-Smolensky | 0.04345 | 0.04390 | Concentration index (tax) | 0.69717 | 0.70444 | Concentration index (after-tax income) | 0.37923 | 0.37868 | Reranking effect | 0.00075 | 0.00085 | Effective average tax rate (t) | 0.13901 | 0.13738 | Revenue effect [t/(1-t)] | 0.16146 | 0.15926 | Kakwani index | 0.27374 | 0.28101 |
Note: The values that have been used to obtain the Reynolds-Smolensky index have been given in bold. Source: Authors’ calculation using PIT microsimulation tool developed at the IEF.
Results 2016 | Income net of tax | Final net income | Gini (pre-tax income) | 0.42343 | 0.42343 | Gini (after-tax income) | 0.37776 | 0.37674 | Reynolds-Smolensky | 0.04566 | 0.04669 | Concentration index (tax) | 0.71930 | 0.73863 | Concentration index (after-tax income) | 0.37709 | 0.37577 | Reranking effect | 0.00067 | 0.00097 | Effective average tax rate (t) | 0.13540 | 0.13134 | Revenue effect [t/(1-t)] | 0.15661 | 0.15120 | Kakwani index | 0.29588 | 0.31520 |
Note: The values that have been used to obtain the Reynolds-Smolensky index have been given in bold. Source: Authors’ calculation using PIT microsimulation tool developed at the IEF.
| Without negative tax credits | With negative tax credits | | 2011 | 2016 | Absolute
difference | %
difference | 2011 | 2016 | Absolute
difference | %
difference | Reynolds-Smolensky | 0.04345 | 0.04566 | 0.00222 | 5.1 | 0.04390 | 0.04669 | 0.00278 | 6.3 | Average tax rate | 0.13901 | 0.13540 | -0.00361 | -2.6 | 0.13738 | 0.13134 | -0.00604 | -4.4 | Kakwani | 0.27374 | 0.29588 | 0.02214 | 8.1 | 0.28101 | 0.31520 | 0.03419 | 12.2 |
| Without
reform | With
reform | C1 | C2 | C3 | C4 | C5 | FGT(0) | 21.31 | 20.94 | 21.27 | 21.21 | 21.25 | 21.12 | 21.24 | FGT(1) | 7.96 | 7.82 | 7.96 | 7.95 | 7.96 | 7.84 | 7.95 | FGT(2) | 4.85 | 4.77 | 4.85 | 4.85 | 4.85 | 4.78 | 4.84 |
Poverty
line
month
(euro) | Ponderation
of median | FGT(0) | FGT(1) | FGT(2) | Without
reform | With
reform | Without
reform | With
reform | Without
reform | With
reform | 103 | 0.1 | 2.5 | 2.45 | 1.84 | 1.82 | 1.71 | 1.69 | 206 | 0.2 | 3.95 | 3.90 | 2.52 | 2.47 | 2.08 | 2.05 | 309 | 0.3 | 6.39 | 6.23 | 3.36 | 3.29 | 2.56 | 2.51 | 413 | 0.4 | 9.86 | 9.49 | 4.52 | 4.41 | 3.17 | 3.12 | 516 | 0.5 | 14.22 | 13.97 | 6.02 | 5.86 | 3.92 | 3.83 | 619 | 0.6 | 21.31 | 20.94 | 7.96 | 7.82 | 4.85 | 4.77 | 722 | 0.7 | 28.68 | 28.30 | 10.35 | 10.11 | 5.99 | 5.85 | 825 | 0.8 | 35.41 | 34.83 | 13.06 | 12.79 | 7.33 | 7.16 | 928 | 0.9 | 42.86 | 42.30 | 15.96 | 15.65 | 8.84 | 8.65 |
Amount of tax base (euro) | 2015 Rates (%) | 2016 Rates (%) | Up to 12,450 | 20 | 19 | 12,450-20,200 | 25 | 24 | 20,200-34,000 | 31 | 30 | 34,000-60,000 | 39 | 37 | More than 60,000 | 47 | 45 |
Amount of tax base (euro) | 2014 Rates (%) | Up to 17,707.20 | 24.75 | 17,707.20-33,007.20 | 30 | 33,007.20-53,407.20 | 40 | 53,407.20-120,000.20 | 47 | 120,000.20-175,000.20 | 49 | 175,000.20-300,000.20 | 51 | More than 300,000.20 | 52 |
Amount of tax base
(euro) | Tax rate 2014
(%) | Amount of tax base
(euro) | Tax rate 2015
(%) | Tax rate 2016
(%) | Up to 6,000 | 21 | Up to 6,000 | 20 | 19 | 6,000-24,000 | 25 | 6,000-50,000 | 22 | 21 | More than 24,000 | 27 | More than 50,000 | 24 | 23 |
Concept | Amount (euro) | Variation rate
(%) | 2014 | 2016 | Personal minimum | 5,151 | 5,550 | 7.75 | Minimum per descendant: | | | | 1st child | 1,836 | 2,400 | 30.72 | 2nd child | 2,040 | 2,700 | 32.35 | 3rd child | 3,672 | 4,000 | 8.93 | More | 4,182 | 4,500 | 7.06 | Age minimum and ascendant < 75 years | 918 | 1,150 | 25.27 | Age minimum and ascendant >75 years | 2,040 | 2,550 | 25.00 | Disability minimum < 65% | 2,316 | 3,000 | 29.53 | Disability minimum < 65% (reduced mobility) | 4,632 | 6,000 | 29.53 | Disability minimum> 65% | 9,354 | 12,000 | 28.29 | Deceased descendant | 1,836 | 2,400 | 30.72 | Deceased ascendant | 0 | 1,150 | 100 | Descendant less than 3 years | 2,244 | 2,800 | 24.78 |
Adiego-Estella. M. [et al.], 2015. Evaluación de la reforma del IRPF de 2015. Madrid: Instituto de EstudiosFiscales.
IEF, 2011. Herramientas de simulación impositiva del IEF. Documentos de Trabajo, No. 16. Madrid: Instituto de Estudios Fiscales.
Kakwani, N. C., 1984. On the Measurement of Tax Progressivity and Redistributive Effects of Taxes with Applications to Horizontal and Vertical Equity. In: R. L. Basmann and G. F. Rhodes, eds. Economic Inequality: Measurement and Policy. Greenwich, CT, USA: JAI Press, pp. 149-168.
Lambert, P., 1996. La distribución y redistribución de la renta: un análisis matemático. Colección Estudios de Hacienda Pública. Madrid: Instituto de Estudios Fiscales.
Foster. J., Greer, J. and Thorbecke, E., 1984. A Class of Decomposable Poverty Measures. Econometrica, 42(3), pp. 761-766 [ CrossRef]
Sutherland, H. and Figari, F., 2013. EUROMOD: the European Union tax-benefit microsimulation model. International Journal of Microsimulation, 1(6). pp. 4-26.
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