Vox Proposes Two-Tier Income Tax with €22,000 Exemption

Vox Proposes Two IRPF Rates and €22,000 Exemption

What if Spain’s personal income tax (IRPF) were reduced to just two brackets? Vox has submitted an initiative in Congress to simplify the income tax: a 15% rate for taxable bases under €70,000 and 25% for higher incomes, plus an exemption of up to €22,000 annually on employment income, regardless of whether one or two payers are involved. The proposal, framed within the party’s fiscal program, promises a tax cut for most salaried workers. The announcement has reignited the eternal debate about who funds the state and whether it is viable to cut revenues without dismantling public services.

The Proposal in Detail

The approach is simple: two rates. Unlike the current scale, which starts at 19% for the first €12,450 and rises to 45% above €60,000, Vox proposes 15% for bases under €70,000 and 25% for amounts exceeding that figure. Additionally, the first €22,000 of employment income would be exempt, effectively leaving many low- and middle-income workers free from IRPF liability. The party argues this measure would stimulate the economy and, in the medium term, increase revenue through higher activity. This is the classic Laffer curve argument, which does not always hold true.

Skepticism from Those Who Have Heard It Before

Not everyone buys the narrative. Some analyses note that promising tax cuts while in opposition costs nothing, and such pledges often fade once parties take power. The case of Podemos, which promised but failed to deliver, is cited. Others point out that the measure remains aspirational until details on compensating lost revenue are provided. The party itself mentions reducing superfluous spending, eliminating administrative duplications, and cutting subsidies, but does not quantify savings. The lingering question is whether less revenue can sustain the welfare state as we know it.

Who Pays the Bill?

The underlying debate concerns how public spending should be financed. Some argue taxes on labor should be minimal and the state should not rely on them. Others warn that exempting most workers risks shifting the entire burden onto a tiny minority, potentially causing social tension and discouraging investment. Data cited indicates that currently 21 million taxpayers file IRPF returns, but 90% of revenue comes from only 8 million. Under Vox’s proposal, that contributing group would shrink further.

The Andorra Example and Other Models

Some participants look abroad. Andorra’s system is mentioned, where no tax is paid up to €30,000, 5% applies between €30,000 and €70,000, and 10% thereafter. Proponents suggest the economy would surge because workers would have more disposable income, boosting consumption and indirect taxes. This hypothesis has not been validated in Spain but fuels the imagination of those favoring a smaller state. Fiscal pogre is also criticized, accused of punishing success and fostering resentment.

The Debt and Pension Problem

Economic reality intrudes. Spain carries €1.5 trillion in debt and faces the retirement of the baby boomer generation in coming decades, straining public accounts further. Given this outlook, some view Vox’s proposal as little more than a fantasy. Arguments stress that without auditing public spending, cutting inefficient agencies, and reforming pensions, any tax cut is unsustainable. The shadow of Milei and his cuts in Argentina looms over the debate, attracting both supporters and detractors.

The Calculation That Doesn’t Add Up

Beyond headlines, the proposal has technical implications. Shared calculations suggest the effective tax rate for someone earning €30,000 would drop to around 4%, compared to the current 15%. For €50,000 earners, it would fall to 8% from 25%. At €100,000, the rate would be approximately 15%, roughly half the current level. Revenue would plummet, and no developed country has implemented anything similar. Defenders counter that IRPF is only part of the fiscal burden; adding indirect and special taxes, total pressure remains high. The battle lines are drawn.