The theory of fiscal federalism and comparative experience show that not all taxes are equally appropriate to be decentralized to sub-central governments; in the Spanish case, autonomous communities and local corporations. In particular, corporate income tax and personal wealth taxes are among those not recommended. High base mobility and harmful tax competition risks are a major challenge that creates endless distortions and problems. Contravening this recommendation, in Spain we chose to decentralize, already in the eighties, the Tax on Net Assets (IPN) and the Tax on Inheritance and Donations (ISD).
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