Taxes for a few

Academic Counselor for Libertad y Progreso

CATO – Carlos Rodríguez Braun indicates that the empirical evidence suggests that the countries or regions that attract resources from abroad are usually rich countries or regions and it is difficult to argue that if the spending and investments of foreigners are directed towards Canada or Spain this only benefits a minority of its citizens.

The left’s attack on Isabel Díaz Ayuso is not accidental, and in it the fiscal issue is probably the most important, because the so-called ‘progressives’ need to place a speech on taxes that clashes head-on with the PP in Madrid. Since they cannot deny that the tax burden on autonomy is relatively lower than the others, they attack a classic of socialism, namely: if there is joy, it is never for the people.

The professor and journalist Milagros Pérez Oliva published in El País an article along these lines: it did not say that it was not possible to lower taxes, but that this measure only benefited a few, increased inequality and (most politically important for the left) it hurt the middle class, that is, the bulk of the population.

For this there is never a lack of statistics on inequality, which are often questionable, among other reasons because they ignore that inequality can increase while poverty decreases.

But Mrs. Pérez Oliva does not analyze inequality. She takes it for granted and also makes it the center of her argument:

Indeed, if Madrid makes tax cuts, it can attract money from all over Spain, but it is by no means certain that the vast majority of Madrilenians will live better, because what counts, in the end, is how the wealth that is created is distributed.

This is a more than dubious argument, because the empirical evidence suggests that the countries or regions that attract money from abroad are usually rich countries or regions, and not outrageously unequal. If the spending and investment of foreigners is directed towards Canada or Spain rather than towards Venezuela or Argentina, it is difficult to argue that this only benefits a minority of Canadians or Spaniards.

Doña Milagros’s analysis shows her weakest side where she places the greatest emphasis. She says that “what counts” is the distribution and not the creation of wealth, which is purely supposedly progressive ideology. Everything indicates that what counts for people is being able to prosper and create wealth, and not that power takes it from them.

Finally, Professor Pérez Oliva will be able to vindicate the economy with regard to Díaz Ayuso, recalling the idea of ​​the unforeseen or unintended consequences, if the punitive incursions of the left against the Madrid president end up strengthening it.

This article was originally published in Libertad Digital (Spain) on October 30, 2020.

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