Firstly, Amadeo discusses the consequences that the increase in inflation has had on people’s daily lives, as well as on taxation, highlighting the effect on Personal Income Tax (IRPF), given that in this tax there are many monetary references in nominal terms. Given that the personal income tax rate is progressive, if it is not updated, inflation will cause average tax rates to rise.

In this context, five regional governments (Andalusia, Valencia, Galicia, Madrid and Murcia) have modified the personal income tax for 2022. The author analyses the impact of these reforms, highlighting the different impact they have had, in each Autonomous Community, on taxpayers with different income levels. In Murcia the effect of the reform is homogeneous, in Andalusia and Valencia the reform benefits lower incomes to a greater extent, while in Galicia tax savings grow with the base and in Madrid they grow with income, which benefits taxpayers with the highest incomes.

Focusing on the personal income tax reform of the Valencian Community, Amadeo highlights how this reform tries to compensate for the negative effects of inflation; it redesigns the autonomous rate, which was flawed, and benefits lower incomes, as their tax bill will be reduced more than that of taxpayers with higher incomes. The author highlights, in addition to the change in the rate, other elements of the reform that will benefit a greater number of taxpayers, such as the increase in the minimum rates and the creation and increase in deductions.

In conclusion, Amadeo provides empirical evidence of the redistributive capacity of the reform through an evaluation carried out by the Chair of Autonomous Taxation of the UV. The results show that the reform will benefit 58% of Valencian taxpayers. The reform will mean an almost null improvement for those taxpayers who already did not pay personal income tax and for high-income taxpayers, while it will be very beneficial for low-income taxpayers.

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