Public intervention in Spain paints a scenario of profound geographical contrasts in which the intensity of the Administration’s action depends drastically on the autonomous community of residence. Latest Observatory on the distribution of taxes and benefits among Spanish householdspublished this Monday by Fedea, puts numbers to the enormous territorial gap that affects the intensity of the . According to the data, corresponding to the year 2023, this safety net acts with a radically different force depending on the community, reaching the point that a household located in the poorest 20% of Extremadura receives almost triple that received by an equivalent household in the Balearic Islands.
In simple terms, a household is considered a net beneficiary of the system when the sum of everything it receives from the public sector – whether in hard cash or in cash – exceeds what it pays. At the national level, according to Fedea figures, six out of every ten Spanish families are in this advantageous situation, but the intensity of this benefit varies drastically by region. The most striking case is that of Extremadura, where households with fewer resources enjoy a total net balance of 112.9% of their income. This figure is the result of a very specific addition and subtraction. They are households that receive from the Administration a series of benefits that, together, are worth more than what the nucleus itself generates when paying taxes and.
That 112.9% is made up of very different items. The first component, and the most visible, is the cash that reaches the current account in the form of pensions, unemployment benefits or social assistance. This money alone represents 79.4% of the income of this group of Extremaduran households. The second component is invisible or in-kind help, basically for education or dependency, which in the case of these families is equivalent to another additional 56.2% of their income. These two components represent a total gross support of 135.6%. However, as these families also pay taxes, mainly VAT and excise taxes, the system deducts 22.7% from them. When doing the accounts is when the final amount appears. In general terms, although with different intensities, this logic operates in all territories. However, a household from the poorest 20% of the Balearic Islands presents a very different reality, with a final positive balance of only 40.4%.
With figures close to Extremadura are Castilla-La Mancha (106.2%), Castilla y León (98.7%) or Galicia (94.5%), while rich and less aged communities such as Madrid (50.3%) or Catalonia (67.2%) move closer to the Balearic archipelago. It is not that the Administration punishes some territories and rewards others, but that mathematics and demographic issues play a determining role, as shown by the data collected by Julio López Laborda, Carmen Marín González and Jorge Onrubia, the Fedea researchers who prepare the report each year.
On the one hand there is the denominator effect, which is clearly perceived when analyzing . The 20% of households with the lowest income in Extremadura are made up of those who earn up to 15,000 euros annually, while in the Balearic Islands this same group includes incomes that reach almost 28,500 euros. As the poor household in the Balearic Islands has a starting income that is almost twice as high, any public aid or benefit, even if it is the same amount, represents a much smaller percentage of their income.
Demographics also play a crucial role. The social protection system redistributes between stages of life, collecting money from taxpayers mainly in their homes to return it when they retire or become ill. For this reason, communities with older populations such as Extremadura or Galicia capture a much larger proportion of public resources in the form of pensions, which are the most powerful instrument for reducing inequality.
If at the base of the pyramid the regional differences are abysmal, at the top the panorama is equally heterogeneous. He acts as a net taxpayer in all corners of Spain. That is to say, these families, without exception, always contribute to the State much more than they receive in pensions, health or education. However, the effort required of them varies drastically by zip code. While in the Balearic Islands and Madrid the wealthiest have negative balances of 27.9% and 22.1% of their income, respectively, in regions such as Melilla or Cantabria their net contribution falls, again in negative terms, to 5.5% and 10%.
They receive more than they contribute
As reflected in the Fedea report, the joint analysis of taxes and benefits shows that households belonging to the first three income quintiles (the poorest 60%) are, on average, net beneficiaries of public intervention, “since they receive a net effective subsidy, that is, a positive difference between benefits and taxes.” This favorable balance decreases with income: from 81.5% of gross income for the first quintile (the poorest 20%) to 14.9% for the third. For their part, the located families are net contributors.
These, however, are average figures. For more detail, the researchers also provide the number and percentage of households within each income bracket that benefit from a positive balance between benefits and taxes. In the poorest 20%, they are 83.3%. In the next two steps they reach 63.6% and 52.8%. From then on, the figure falls below half and reaches 5% in the richest 1%. In total, 50.6% of all Spanish households obtain more than they contribute.
