The Great Gap: how rich don’t pay their fair share in Spain

2023

The Great Gap: how rich don’t pay their fair share in Spain

Entry type: Single project

Country/area: Spain

Publishing organisation: elDiario.es

Organisation size: Big

Publication date: 2022-09-25

Language: Spanish

Authors: Raúl Sánchez, Diego Larrouy, Victòria Oliveres

Biography:

Raúl Sánchez: Spanish data journalist covering stories of inequality, gender, health, taxes and urbanism at elDiario.es. He coordinates elDiario.es data team.
Diego Larrouy: Spanish journalist specialized in banking sector, economy, tax system and telecommunication at elDiario.es.
Victòria Oliveres: Data journalist member of elDiario.es data team. She is specialized in data gathering, analysis and visualization and focused in education, health, environment and gender stories.

Project description:

Do the rich in Spain pay their fair share? “The Great Gap” is a journalistic project that focuses on the increasing inequalities between rich and poor in the country and reveals holes in the taxation system that allows millionaires and large companies to pay less taxes for their capital gains and business profits. elDiario.es dived in tax records and income statistics to explain how the rich avoid paying their fair share and mapped economic segregation in Spanish cities to provide context to these inequalities.

Impact reached:

The investigation revealed for the first time how the 0,01% of richest Spanish taxpayers benefited from a dual system that allows them to pay less taxes on gains produced from what they own instead of incomes produced by their work (link 1). We proved that these capital gains that are less taxed contributed to multiplying the gap between the super rich and the rest of the population producing income segregation mainly in large cities. “The Great Gap” also unveils how taxes to business profits have fallen due to dozens of tax reforms that have contributed to erode tax bases and reduce the tax bill, especially for large business groups and multinationals (link 3).

These revelations had a direct public impact: the Government announced fiscal measures barely a week after their publication, which included tax increases and regulatory changes that corrected part of the holes discovered in this investigation. The articles were shared by dozens of economists, politicians and stakeholders during the week it was published. Also the four pieces have been viewed by more than half million users and they were of the most visited this year. The project was not only text and charts and it was adapted to other channels. The project was intended to be transferable to other formats in order to reach more and different audiences. That’s why we did an episode of our daily podcast that reaches more than 20.000 users per day and delivered a targeted social media campaign to reach younger audiences in TikTok and Instagram. The stories opened elDiario.es’ front page for 3 consecutive days, making other citizens engage with the topic.

Techniques/technologies used:

We used Google Spreadsheets, Excel and R programming language to compile for data compilation and analysis. Datawrapper, Javascript and D3 for graphics and data visualizations. Mapbox and Javascript for census block maps.

Context about the project:

The hardest part of the project was to obtain and understand official tax records that proved the gap between the 0,01% richest and the rest of taxpayers in Spain. We searched dozens of Tax National Agency documents to obtain the data and also to comprehend which numbers we had to use. For example, we examined all double taxation agreements signed by several Spanish Governments to unveil how multinational companies can use them to pay zero taxes for repatriating dividends. This investigation of income and business taxes paid by the rich was combined with personal income database analysis of more than 36.000 censal blocks.

For example, we programmed a R script that analyzes which income sources are more important in each neighborhood in the country that revealed how capital gains compute a third of rich neighborhood earnings. We also revealed dozens of income islands from automatic processing in R of income statement records that show income borders and economic segregation in Spanish cities.

Furthermore, the project used educational journalism techniques: we did not want to only demonstrate the inequalities but make them understandable to readers. The pieces included interactive data visualizations and scrolling narratives that helped understand high volumes of data and technical explanations. For example, the specific fiscal aspects that allow rich people to not pay their fair share: the story explains, step by step, how people who earn their income from salaries pay more taxes in Spain than people who earn the same income from stock market investments and real estate or capital gains.

What can other journalists learn from this project?

This project shows how the information available in official tax records could be exploited in other countries to check if the richest 0,01% and large companies are paying their fair share in other jurisdictions. Are these trends repeated in Europe, America or Asia? Is inequality growing in the rest of the world?

This one can be a transnational investigation to analyze the gaps of effective rates between income percentiles in all countries and also how income sources are important to determine if a household is rich or poor.

The page format and interactive visualization are also part of one of elDiario.es’ long-term bet to give their readers informative content in innovative format by promoting collaborative work between traditional journalists and the data and visualization team.