The number of rich in Spain fell with the pandemic for the first time since 2013 | Economy

Screens in the Madrid Stock Exchange.
Screens in the Madrid Stock Exchange.ALTEA FABRIC (EFE)

The pandemic has been a turning point that has turned countless trends around. Among them is the evolution in the number of taxpayers who declare the highest income, above 601,000 euros. After six years of uninterrupted growth, the health emergency brought a sudden halt: in 2020, the number of the richest fell to 11,113, a decrease of 6.7% compared to the previous year and the first setback since 2013, according to the latest data from the Tax Agency on personal income tax filers.

The increases in recent years had led to new records for the number of individuals who declare the highest incomes. After hitting lows in 2013 due to the financial crash ―with only 4,553 declarations above 601,000 euros, after falling almost 24% between 2007 and 2008―, the figure of the wealthiest declarants had once again gained weight at an intense rate, well above the growth of the economy. In 2018, it recovered and exceeded the levels prior to the Great Recession, and in 2019 it touched its all-time high. Although it fell in 2020, the level continues to be the highest since 2017.

The body’s data does not allow knowing how many taxpayers are millionaires, as there is no breakdown above 601,000 euros. The statistics are compiled from the income tax return data and are published with a two-year offset. This means that the latest information available, published this Monday, refers to the income obtained in 2020 and declared in 2021, which fully includes the blow of the pandemic and the effect of the public aid deployed to limit the damage, such as the files temporary employment regulation (ERTE) or extraordinary help for the self-employed. A social shield that modified the usual behavior of the main economic variables during crises, and that allowed collection to fall less than GDP, contrary to what happened in the 2008 financial crisis.

The number of total declarations increased in 2020 compared to 2019, by 2.9%, to 21.6 million taxpayers. The Tax Agency’s statistics group settlements into 10 sections, which are differentiated according to the amount. The largest group is made up of the sum of the lower half, up to 21,000 euros: these taxpayers account for more than 60% of the total, with 13.1 million returns, and have grown by 4.5% compared to 2019 The highest scale, which groups returns above 601,000 euros, only represents 0.05% of the total.

The bulk of the richest taxpayers is concentrated in Madrid – the only community that has a 100% subsidized wealth tax -, followed by Catalonia, with 5,176 and 2,624 filers respectively, although in both cases there has been a decrease with respect to the pre-covid era. If the previous scale is added to this higher section, which goes from 150,000 to 601,000 euros, a fall is also recorded. The decrease has been both in absolute terms, from 118,602 settlements to 114,507, and as a percentage of the total, from 0.57% to 0.53%, compared to 2019.

The statistics on personal income tax filers also breaks down the average income by type of economic activity. In 2020, both the income declared for employees and the self-employed decreased compared to 2019. Discounting contributions and other expenses, the former earned an average of 22,609 euros, compared to the maximum of 23,171 euros in the previous year, while the second group declared on average 13,643 euros, almost 10% less than the previous year. In the case of self-employed workers who contribute by modules, a regime that can only accept a limited number of activities up to a maximum billing limit, the decline has been more than 45%, up to 5,525 euros.

stock market crash

A clue to the decline in the number of wealthiest filers can be found in the evolution of stock markets and the drop in dividends during the year of the pandemic. The reason is simple and has to do with the composition of income, which is very different depending on the segment of the population considered: income from work tends to have a much greater relevance for medium and low incomes, while financial capital has a much higher specific weight for the wealthiest.

2020 was a black year for the stock markets and corporate profits: the Ibex 35, the main Spanish index, closed the year as the worst in a decade and accumulated losses of more than 15%. The Tax Agency’s statistics partly reflect this disaster: for the richest taxpayers, the drop has been greater, double digits, in returns on movable capital -dividends, interest, etc.- and capital gains, compared to returns from work.

Despite the drop in 2020, the stock markets usually recover quickly and everything points to the fact that in the next edition the richest of the income statement will grow again. The latest report by the investment manager Capgemini, published in mid-June, indicates that the great fortunes – in this case, the millionaires and all the assets they gather, beyond income – increased last year both in number as in total wealth. In Spain, they grew by 4.4%, to 246,500 people, and their wealth totaled 719.7 billion dollars, 5.3% more than in 2020.

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