Government Plans To Eliminate Reduction For Joint Taxation Of Personal Income Tax

The Government plans to eliminate “gradually” the reduction by joint taxation in personal income tax, considering that it “creates a disincentive to the participation of the second income earner”, who are usually women.

The measure, which aims to promote the incorporation of women into work, is included in the Recovery, Transformation and Resilience Plan sent to Brussels, according to El País and will be adopted through the establishment of a transitional regime.

It benefits two million households and its cost rises, according to the latest General State Budgets (PGE), to about 1,000 million euros a year.

“It includes the gradual disappearance of the reduction by joint taxation through the establishment of a transitory regime, because it generates a disincentive to the labor participation of the second income earner (mainly women),” the document indicates.

As the Plan defends, in an analysis of gender equality aspects, “a modern tax system should not serve exclusively to procure income that finances public spending, but should directly contribute to enhancing the impact of public policies , serving as catalyst to achieve transformations in areas such as gender equality, attention to disability, conservation of the environment or protection of health “. “There is considerable consensus that this measure discourages the entry of women into the labor market,” indicates the Ministry of Finance.

UP TO 3,400 EUROS DEDUCTION
Currently, the reduction by joint taxation of personal income tax depends on the type of family unit in question.

In the case of joint returns of family units made up of both spouses not legally separated and, if any, minor children living together, as well as legally disabled adults subject to extended or rehabilitated parental authority, the tax base will be reduced by 3,400 euros per year.

In joint declarations of single-parent family units, that is, those formed, in cases of legal separation or when there is no marriage bond, by the father or the mother and all the minor or adult children legally incapacitated subject to extended parental authority or rehabilitated living with one or the other, the tax base will be reduced by 2,150 euros per year .

In this case, this reduction will not be applied when the taxpayer lives with the father or mother of any of the children who are part of their family unit. And the reduction that comes from those mentioned will be applied, first, to the general tax base, without it being negative as a consequence of such reduction. The remainder, if any, will reduce the tax base of the savings, which cannot be negative either.

Last year the Tax Authority (Airef) prepared a report on the tax benefits of the Spanish tax system in which it precisely reviewed the advantages and disadvantages of this reduction in personal income tax. And it estimates that the cost to the public coffers of this initiative amounts to 2,293 million , and the beneficiaries are 4.2 million people, 2.1 million households, 18% of taxpayers and 17% of families. The agency maintains that the tax benefit is distributed evenly and does not alter inequality.

The Tax Agency expects to receive almost 3.5 million joint returns in the 2020 income campaign, 7.1% less , a downward trend that has been maintained for years since this reduction is applied mainly in the case of that one of the spouses does not work.

Pensions
Also with the objective of advancing equality, the Plan indicates that the future pension reform “will review the procedure for integrating contribution gaps”, that is, of periods in which no work has been done, “to meet reality increasingly fragmented career paths “.

This fragmentation of careers, which ends up affecting the calculation of the pension, is closely associated with temporality, he adds, which especially affects young people and women .

Labour reform
Among the labor-related measures envisaged in the Recovery Plan is a simplification of the hiring modalities , an adequate regulation of training contracts, the promotion of fixed-discontinuous contracts for seasonal activities or the penalization of the excessive use of contracts. of very short duration.

It also provides for a 2021-2027 Plan for decent work for young people and training programs in projects of public and social interest, first professional experience in public administrations or research.