For every hour worked, 30 minutes go to paying taxes

The State keeps, through taxes, approximately half of what workers produce in a year , according to a study by the Argentine Institute of Fiscal Analysis (IARAF) entitled " How much is the formal tax burden on an Argentine salaried family ?"

Economist Nadin Argañaraz 's team sought to identify " Tax Independence Day " for different profiles of salaried families, based on their income, assets, consumption, and savings patterns.

The study reveals that the three levels of government (national, provincial, and municipal) represent a formal tax burden of between 47.3% and 49.9%. Expressed in time, this means that workers must allocate almost 30 minutes of every hour to pay taxes.

In a calendar year, "Tax Independence Day" falls between June 22 and July 1. Since then, tax revenue remains in the private sector. The proximity of that date prompted the update of the report that IARAF has been producing for years.

Of course, the taxes collected by the three levels are largely used to return to society through services such as security, health, and education, among others.

But the IARAF report also seeks to highlight some issues regarding Argentina's tax structure: there are 155 different taxes; due to high evasion and informality, the registered sector of the economy bears a significant burden; and labor taxes bear the greatest burden, and are regressive .

First, the story of the last three decades. From 1997 to 2002, effective tax pressure—that is, taxes actually collected—averaged 20% of Gross Domestic Product (GDP). From 2003 to 2015, there was a jump to 32.3%; and since then, a decline over the last 10 years to the projected 29.2% for 2025.

If we count only the tax burden on the formal sector, the nation collects 86% of all taxes; the provinces 10%; and the municipalities 4%. The figures change with the effect of co-participation, although the nation still retains more than 70%.

On the other hand, the most significant aspect of the tax structure is the weight of labor taxes. The lower the income, the proportionately higher the percentage of labor contributions (in an employment relationship, companies deduct these contributions from employees' gross salaries), which in turn have a cap.

This system means that middle-income profiles, higher than those with low incomes, end up paying proportionally less taxes, since consumption is taxed, not savings.

According to the four profiles that IARAF created for the report (typical parents with gross monthly incomes of $1,550,000, $3,380,000, $4,950,000, and $7,100,000, with the latter three having a car and their own home), only the highest-income worker pays slightly more than the person at the bottom of the pyramid.

Under the current system, the Institute found that "although the first income level does not pay income tax, it bears a greater burden" due to the predominance of regressive labor taxes and the cap on personal contributions. Likewise, the progressive income tax only taxes the highest income levels.

For IARAF, the way to achieve progressivity is to eliminate indirect taxes, such as those levied on bank credits and debits, internal taxes, fuel taxes, gross income taxes, and municipal consumption taxes.