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Where is the minimum wage seen in tax statistics?

All the individual information on salaries available to the Tax Agency comes from the annual informative declaration of withholdings on income from work and economic activities (form 190), which is mandatory for employers, regardless of the number of employees. their salaries, their withholdings or the period of the year in which they have been hired.

The publication Labor market and pensions in tax sources is responsible for the statistical exploitation of these data. In a previous entry in this newsletter ( Tax Agency: Employment and salaries in the Tax Agency statistics ) detailed other products that revolve around this model and the operations of other organizations that draw on this information.

One of the advantages that stood out then was the possibility of going down to the maximum level of detail or, in other words, although the aforementioned statistics have an aggregate nature, they are built from below, from the individual data of the people who have perceived the benefits. wages. This allows for salary distributions with maximum granularity. These distributions (in sections of 200 euros) can be found, since 2001, in the file Salary distribution which contains information on the number of employees, salaries and withholdings made. The last one available, that of 2022, appears in the following graph.

Number of employees by salary ranges. Year 2022

The characteristic that is interesting to highlight in this note is the detail with which the distribution is presented, unattainable in other statistical approaches on the subject, which allows the analysis of certain relevant points, such as the ranges around the minimum interprofessional wage (SMI). If you zoom in on that area for recent years, you would have the following graph in which the current annual SMI is indicated for each year:


It must be clarified, however, that, for several reasons, this is only a proxy for the true number of recipients of the minimum wage. Firstly, on model 190 there is no mark that allows these workers to be accurately identified. Secondly, what is being shown in the graph is the annual full-time SMI; If the day is not complete, it is more difficult to locate where these workers are (although, as seen in the first graph with the complete distribution, there is another jump at the level of 7,100 euros that can also be attributed to the SMI, in this case for half of the full day). And, thirdly, workers with the SMI may have additional benefits (night work, dangerousness, etc.) that cause them to appear to the right of the SMI in the distribution.

Just as interesting as the salary distribution is the curve of effective withholding rates, also accessible in the file cited above. The following graph shows that curve for recent years:

Effective withholding rates by salary brackets 2018-2022

As can be seen, the changes in recent years are concentrated in lower salaries, around the SMI, which is where the successive changes in the regulation of the general reduction on work income have had an effect. If these sections are isolated, as is done in the following graph, the rate reduction for this group can be seen more clearly:

Types of withholding by salary brackets 2018 and 2022

Finally, it must be emphasized that this is an effective rate curve, which explains the small irregularities that occur and, above all, the fact that the rate does not become zero in salary brackets where withholdings, for the most part, part of the workers, they are. In this regard, two issues must be remembered: one, that in these sections there are also workers who have not worked the full year and that, therefore, the salary recorded in form 190 does not correspond to an annual salary and they may have withholdings greater than zero; and, two, that there is a minimum withholding rate equal to 2% for those contracts with a duration of less than one year, which prevents the improvements from the reduction from being passed on to workers in that situation.