The Role of the Public Sector in the Decline of the European Middle Class: The Spanish Case

In the years following to the financial crisis of 2008, middle class has been particularly affected by the tax burden exerted in all societies. Besides, the pressures of indirect taxes, particularly reverting on people with lower incomes, and taxes that assess the income earnings of citizens. Currently, it is necessary to make reference to the fiscal gap triggered by the difference between what the employee really supports and the cost that his or her salary represents for his payer. This fiscal gap is particularly large in Mediterranean countries, where the difference between the net salaries charged by employees is far from the actual cost (gross pay) for the employer. The experience demonstrates a direct relationship between high fiscal gaps and high unemployment rates. A different issue is how to get a redistributive effect, if this gap decreases. Furthermore, taxation is not unaware to population policies, and a decrease in fertility rates to a medium term causes societies to have a smaller workforce, which harms the redistributive levels. Therefore, this article intends to analyze whether the States require from a fiscal system to raise tax rates, in order to allow efficient policies in favor of the family.