How the State Redistributes Wealth Upwards: Spanish Edition

In a recent opinion piece, Antonio Morales Méndez, mayor of the municipality of Agüimes in the Canary Islands, gives us a good deal of figures that reflect the reality of welfare-state realpolitik in Spain (the translation is mine):

… the director of the internal revenue agency, Beatriz Viana, declared that as part of a plan to fight the submerged economy, the Treasury would send tributary agents to small business (like restaurants, coffee shops, stores, etc.) to seize their cash if they have fiscal debts. She also said that this would be done during commercial hours and even if there were customers in the premises. This announcement coincides with data from the National Statistics Institute (INE) that reveal that small firms as a whole have lost a third of their sales since 2006. Since the beginning of the crisis, one of every three of these companies has disappeared from the map. 500,000 businesses (200,000 small firms and 300,000 autonomous workers), with a total annual sales of more than 600,000 million Euros have closed their doors. While this happens, INE–who points out in the same working paper that disposable income for Spanish households dropped 3.2% during the second quarter of this year and that 21.8% of the population is under the threshold of poverty risk–tells us that Spanish millionaires keep engrossing their fortunes.

According to the union of tax inspectors (GESTHA), 72% of fiscal fraud in Spain corresponds to large firms and large patrimonies, 17% to small firms, 9% to autonomous workers and 2% to the rest of the population, but the exemplary and rigorous measures are applied to the weakest group. Furthermore, according to the same civil servants (who ask for more human and material resources), 80% of the inspectors (one for almost 2,000 citizens) is dedicated to prosecuting small frauds and irregularities of small firms, autonomous workers and employed workers who forget a detail in their tax declaration instead of going after the “the business groups, the multinational corporations and the big fortunes.” This is one more data point to consider when evaluating why the country’s largest companies and fortunes evaded more than 40,000 million Euros in taxes last year with total impunity.

Regrettably, as it is typically the case, Méndez utterly fails to realize that this is THE fundamental problem of democracy, that the welfare state’s main function, is corporate welfare; and enthusiastically blames “total market freedom” for the whole mess.

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