In April 2020, shortly after the pandemic struck, 159 million households in the U.S. received a $1,200 check (plus an additional $500 for each dependent child). This initiative, known as economic impact payments or stimulus checks, was also implemented in December 2020 and March 2021. Within just a few days, the Trump administration successfully reached a significant majority of American households. The initial recipients were those who already had their tax information on file due to previous income tax returns, with payments deposited directly into their bank accounts. This prompt action provided millions of families with a vital financial lifeline during a period of crisis.
A key objective of policy measures is to ensure they effectively reach the intended recipients. However, seemingly minor issues, such as having an outdated address or lacking a registered bank account, can prevent even the most well-intentioned aid initiatives from succeeding. This is particularly important during emergencies like the pandemic or the DANA, where the speed and efficiency of aid distribution are critical.
In the ongoing discussion regarding minimum wage increases this year, tax implications are at the forefront. The improved financial situations of many families prompt them to file their tax returns. While often viewed as an unpleasant necessity, from a social standpoint, it offers a crucial advantage: it provides a clearer picture of citizens’ incomes. An administration that has a better understanding of income distribution can create more effective interventions, adjust benefits, and ensure resources are allocated more fairly.
Moreover, individuals with lower incomes may gain from filing a tax return. This is evident with the minimum living income (IMV), which mandates that all beneficiaries and their cohabitants submit a tax return, even though it is exempt from taxation. For low-income earners, filing a tax return could result in refunds, as tax deductions or family minimums may apply, thereby lessening their tax liability.
The Spanish and Catalan tax systems are intricate and have higher marginal rates compared to many neighboring nations, yet they collect less revenue. This issue stems not only from tax evasion but also from numerous loopholes and deductions intended to benefit the middle and upper classes. Tax incentives that should facilitate redistribution often overlook low-income families.
It is important to note that filing taxes does not necessarily equate to paying more in taxes. In this regard, measures like the reduction in the regional tax bracket agreed upon by the government and ERC can ease the process. However, new strategies, such as introducing refundable tax deductions or credits, should be considered. This approach would enable low-income families to genuinely benefit from current deductions, enhancing the system’s equity and promoting a more effective distribution of benefits.
Many voices in public discourse mistakenly regard “avoiding tax returns” as an advantage for those with lower incomes. This perspective is misguided. Filing taxes transcends mere tax payment; it signifies participation in a system designed to benefit everyone.
