Novel evidence is provided on the strategic usage of owner-controlled firms as a means of tax avoidance under dual personal income taxation. Taxpayers with sufficient income levels face incentives to shift income towards corporations, as the joint tax liabilities of corporate and capital income taxes fall below the level of the progressive labor income taxation. We exploit linked micro-data with income, wealth and labor records and leverage results from several reforms in Spain which created variation in these incentives across taxpayers and over time to causally identify the magnitude of this income shifting behavior through diff-in-diff methodologies. We find significant tax-motivated responses among business owners, with a 20 p.p. increase in the income shifting likelihood upon activation of the income-tax-saving motive. These results demonstrate how the intended progressivity of the personal income tax can be undermined through strategic income shifting via owner-controlled corporations, reducing the effective tax burden on the top-income taxpayers.

A 2019 reform mandated all Spanish personal income tax filers to report the precise cadastral ID of their primary residence, enabling tax authorities to systematically cross-check tenant and landlord returns at the real estate property level. Exploiting a difference-in-differences approach and administrative linked microdata at the property level spanning 2019-2022, I document a 10% increase in the number of individuals declaring residency as tenants and a 15% rise in landlords' declared rental income. These findings reveal substantial underreporting of rental income prior to the reform, particularly by high-income landlords. The results underscore how tax reforms disguishing new third-party reporting obligations can enhance tax compliance, improve effective tax collection, and strengthen the actual progressivity of the tax system.

This paper examines the incidence of real estateproperty taxes in rental markets, focusing on the extent to which landlords shift tax liabilities onto tenants - pass-through - and the factors influencing this pass-through. Using unique administrative linked micro-data at the real estate property level from Spain, including matches between landlords and tenants, we exploit variations in property tax changes across municipalities from 2016 to 2021 through a staggered difference-in-differences approach. Our findings reveal a significant pass-through effect: for every €1 increase in property tax liabilities, rents increase by approximately €1.98, and a €100 increase in tax payments raises the likelihood of renting a property by 0.32%. The pass-through is stronger in tight rental markets, for lower-value properties, among landlords with fewer properties, and in properties with low-income tenants. The study highlights the role of rental market conditions and tax incentives in shaping property tax pass-through. These results have critical implications for housing policy, demonstrating that property tax reforms influence rental market dynamics and affect distributional outcomes, with tenants bearing a significant share of the tax burden. Policymakers must carefully balance equity and efficiency in property taxation.

Novel evidence is provided on asset portfolio reshuffling and the strategic use of owner-controlled firms, both incorporated and unincorporated, as mechanisms for progressive wealth tax avoidance. Taxpayers with substantial wealth face incentives to engage in asset-shifting strategies to reduce their taxable base, including splitting assets among family members, reclassifying primary residences, purchasing exempted historical or artistic assets, reporting undervalued asset valuations, or mainly transferring assets into wealth tax-exempt controlled businesses. Using rich administrative micro-data on income and wealth from 2016 to 2022, we exploit regional variation in wealth tax thresholds across Spain, where minimum exemption levels vary across regions and Madrid directly abolished the wealth tax, to causally identify the extent of these behaviors through triple difference-in-differences methodologies. Our findings reveal significant tax-motivated responses among high-wealth individuals, particularly business owners, with an 8 p.p. increase in the share of wealth-tax-exempt business assets upon crossing regional minimum wealth tax exemption thresholds. These results demonstrate how the intended progressivity of the wealth tax can be undermined through strategic asset shifting, reducing the effective tax burden on the wealthiest taxpayers.

Spain is on a path toward the decarbonization of the economy. This is mainly due to structural changes in the economy, where less energy-intensive sectors are gaining more relevance, and due to a higher use of less carbon-intensive primary energy products. This decarbonization trend is in fact more accentuated than that observed in the EU28, but there is still much to be done in order to reverse the huge increases in emissions that occurred in Spain prior to the 2007 crisis. The technical energy efficiency is improving in the Spanish economy at a higher rate than in the EU28, although all these gains are offset by the losses that the country suffers due to the inefficient use of the energy equipment. There is an installed energy infrastructure (in the energy-consumer side) in the Spanish economy that is not working at its maximum rated capacity, but which has very high fixed energy costs that reduce the observed energy efficiency and puts at risk the achievement of the emissions and energy consumption targets set by the European institutions. We arrive to these findings by developing a hybrid decomposition approach called input-output logarithmic mean Divisia index (IO-LMDI) decomposition method. With this methodological approach, we can provide an allocation diagram scheme for assigning the responsibility of primary energy requirements and carbon-dioxide emissions to the end-use sectors, including both economic and non-productive sectors. In addition, we analyze more potential influencing factors than those typically examined, we proceed in a way that reconciles energy intensity and energy efficiency metrics, and we are able to distinguish between technical and observed end-use energy efficiency taking into account potential rebound effects and other factors.

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  2021

  Jan

  Are We Moving Towards An Energy-Efficient Low-Carbon Economy? An Input-Output LMDI Decomposition of CO2 Emissions for Spain and the EU28

  Darío Serrano-Puente

  Bank of Spain - Working Papers, n. 2104

  
  

   URL

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 Twitter Thread Summary

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  @darioserranopue ❓ ¿Se mueve España hacia una economía más eficiente energéticamente y más descarbonizada? Sí, pero no tan rápido como podría debido a una eficiencia energética lastrada.

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  2021

  Informe España 2050

  Oficina Nacional de Prospectiva y Estrategia del Gobierno

  Ministerio de la Presicencia

  
  

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  2021

  Recent Changes in CO2 Emissions in Spain

  Aitor Lacuesta, María de los Llanos Matea, and Darío Serrano-Puente

  Banco de España - Economic Bulletin, n. 02/2021, box n. 6

  
  

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Is the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.

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  2021

  Jan

  Optimal Progressivity of Personal Income Tax: A General Equilibrium Evaluation for Spain

  Darío Serrano-Puente

  Bank of Spain - Working Papers, n. 2104

  
  

   URL

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  2020

  Jan

  Optimal Progressivity of Personal Income Tax: A General Equilibrium Evaluation for Spain

  Darío Serrano-Puente

  Master's Thesis | Universität Mannheim

  
  

   Manuscript

 Twitter Thread Summary

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  @darioserranopue ❓¿Pagan los más ricos suficiente IRPF en España? ¿Por qué es óptimo aumentar la progresividad del IRPF en España? ¿Cuáles son las consecuencias de aumentar dicha progresividad?

 Awards

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  Distinction Research Feature Bank of Spain 2021

 Media Appearances

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  El Confidencial 2020
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  La Vanguardia 2020
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  20 minutos 2020

 Twitter Thread Summary

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  @AIReF_es 🗞️ La @AIReF_es publica su primera #Opinión sobre el Ingreso Mínimo Vital y concluye que el #IMV ha desplegado solo una parte de su potencial, pero tiene recorrido para convertirse en un instrumento más potente en la lucha contra la #pobreza.

 Media Appearances

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  El País 2022
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  El Confidencial 2022
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  El Mundo 2022
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  El Diario 2022
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  ABC 2022
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  Onda Cero 2022

 Twitter Thread Summary

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  @darioserranopue 🗞️ ❓¿Cómo afectó la pandemia a las emisiones de CO2 en España? ¿Cuál es la tendencia a largo plazo?

 Twitter Thread Summary

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  @BancoDeEspana El aumento del comercio online ha incrementado la #competencia y favorecido una caída de los márgenes, si bien el beneficio medio del sector se ha mantenido al haberse moderado paralelamente los costes de aprovisionamiento.

 Media Appearances

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  El País 2020
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  La Vanguardia 2020
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  Cadena Ser 2020
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  El Correo 2020
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  Europa Press 2020