What if Spain taxed profits instead of work?

In the depths of an unemployment crisis, I would really like to know why employing people (including oneself) is taxed so highly in Spain.

Employing someone on a mileurista wage of 1400 euros per year costs a company over 1800 euros, and the self-employed have to make social security payments of around 250 euros per month, whether they earn anything or not. Yes, you read that right: 205 euros for the privilege of being able to write a bill to one client, even if it’s only for 10 euros.

I’m no economist, but it seems only logical to me that both employing people and working as a freelancer should be made as cheap and easy as possible, and that taxes should be levied if and when profits are made.

This isn’t the only example of perverse incentives in the Spanish tax system. Since 2010 VAT has risen from 16% to 21%, at a time when demand is low and people aren’t spending.

The Spanish treasury needs to recognise that taxation is not just about collecting revenue wherever possible. Rather, it is a vital tool for creating the right incentives to stimulate economic growth (as well as other social goods). Tax wealth, not work!

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