This is a translation I did of an article on regressive taxation in Colombia as of December 2019. All errors are mine. Source text links: https://elchapin.co/reforma-tributaria-a-la-medida-de-los-super-superricos/ & https://www.nodal.am/2019/12/colombia-reforma-tributaria-a-la-medida-de-los-super-superricos/

1. 1
Colombia’s tax reform—In the service of the ultra-ultrawealthy
By Diego Cortés and/or Diana Moure
El Chapín (December 16, 2019)
NODAL (December 18, 2019)
Source text links: https://elchapin.co/reforma-tributaria-a-la-medida-de-los-super-superricos/ &
https://www.nodal.am/2019/12/colombia-reforma-tributaria-a-la-medida-de-los-super-
superricos/
Colombia is characterized as having one of the economies with the greatest concentrations of
wealth and inequality in the world. This situation hasn’t changed because those who have
governed the country have never been interested in reversing such inequities.
Luis Jorge Garay and Jorge Espitia, two researchers, completed an exhaustive study with data
from individual income statements from the National Directorate of Tax and Customs (Dirección
de Impuestos y Aduanas Nacionales; DIAN). They presented this analysis in their book: The
Dynamics of Inequalities in Colombia (Dinámica de las desigualdades en Colombia; Ediciones
Desde Abajo/Publications from Below; 2018).
Countries with developed economies, such as those in Europe, have a taxation system that, to an
extent, allows them to redistribute wealth to improve the working classes’ income levels and
reduce inequality, which would be much higher without state intervention. In Colombia, to the
contrary, after collecting taxes and making transfers, “the concentration in income distribution
remained practically unchanged,” as Garay and Espitia confirm and indicate.
What’s most striking about their research is their ability to disaggregate tax information at the
individual level in order to differentiate between income levels and by each person’s earnings
and each business firm’s profits. From this data (and interpretation thereof), a category of ultra-
ultrawealthy businesses arises that constitutes 0.1% of the biggest companies of Colombia that
filed taxes with the National Directorate of Tax and Customs (approximately 480 in 2017).
Upon reviewing the taxes this small group of businesses pays, it’s confirmed that the effective
income [tax] rate (with respect to gross incomes minus costs—net incomes) is distinct from the
legally codified nominal [tax] rate. The exemptions, write-offs, and deductions that exist within
the Taxation Statute allows them ultra-ultrawealthy businesses to pay much lower taxes in
practice.
This is in stark contrast to Álvaro Uribe and Germán Vargas Lleras who claim that businesses’
income taxation and employee-hiring costs in the country surpasses 71% of their profits. Garay’s
and Espitia’s data show that the effective income [tax] rate is barely 3.86%. If the cost of social
security is added to the effective income tax, it’s possible to calculate that the taxation rate for
ultra-ultrawealthy businesses doesn’t surpass 10.5% of its profits—much lower than what
advocates of the new tax reform crow about.

2. 2
Iván Duque Márquez’s government is trying to give more tax write-offs, worth over nine (9)
billion pesos, to businesses, thus reducing the nominal income [tax] rate from 33% to 30% in the
next three years [by 2022—translator’s note] and limiting the value-added (or sales) tax to the
importation of capital goods. This, added to tax exemptions and benefits that larger businesses
have, will deepen the inequality that exists today among miniature-, small-, and medium- sized
businesses on one side and huge multinationals and the ultra-ultrawealthy on the other.
Per the authors’ research, it’s possible to refute some existing myths about taxes in Colombia.
1) The big businesses are the ones paying taxes in Colombia
That’s uncertain. 50% of the taxes collected in 2018 come from indirect taxes that all
Colombians pay (such as the value-added tax, gasoline surcharge, and consumption tax). These
taxes are highly regressive because they mostly affect the poor and middle classes.
2) A wealthy person in Colombia is somebody who earns over four (4) million pesos
[and] who has an apartment or a car
In a country with so much destitution, parts of the middle class tend to be categorized as
Colombia’s wealthy. This trick allows some people to hide the fact that they are in fact part of
that ultrawealthy group—they thus pay practically nothing in taxes. For example, the authors
confirm that 47% of the assets of everybody filing [taxes] in Colombia is concentrated among
10% of high-income persons in Colombia. Even when they possess so much wealth, these people
hardly pay 3.53% in effective taxes on their incomes.
3) Giving the large-scale businesses more tax reductions and exemptions solves the
unemployment problem
There’s enough proof to show that lowing taxes for big businesses doesn’t increase employment.
That’s because a business will only increase the number of persons employed if it needs to
produce more, which only happens if society in general demands more goods and services. The
unemployment problem then goes to the domestic market, which in Colombia is much reduced
due to policies of economic opening and free-trade agreements. These policies and agreements
have favored importation, the destruction of [domestic] industries, and the breaking up of
Colombia agriculture. Congress will negotiate tax reform this week [mid-to-late December
2019—translator’s note] in an agreement between Iván Duque Márquez’s government and the
Radical Change Party [Cambio Radical, which is a center-right, classical-liberal political
party—translator’s note]. This tax reform won’t solve any problems related to unemployment or
the lack of national production. Indeed, it’ll deepen inequality and the regressive nature of the
Colombian taxation system.