Correlation Between Cumulative Tax Burdens, Deductibility of Tax Payments as Business Expenses, and Socio-Economic Development Indicators: A Meta-Comparative Analysis in OECD Countries and a Proposal for Reform Based on the Principle of Economic Reality
Mikel de Elguezabal Mendez – Rodulfo
LEA Foundation Civil Association
Uharte, Navarra – Cumaná, Sucre, Venezuela First edition: 2026 (in progress)
Fundación LEA, Calle Palmar, D-12, Riberas, 6101 Cumaná, Sucre, Venezuela.
Plaza Ferial AP 008, Uharte, 31620, Navarra.
In a Virtuous Earth Collection.
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Abstract
This
paper examines the impact of high cumulative tax burdens on
self-employed individuals and SMEs, focusing on the limited practical
deductibility of personal income tax (PIT) and social security
contributions paid from business cash flows. Through a meta-analysis
of fiscal, economic, and business studies in OECD countries, the
analysis compares tax burdens with indices of economic freedom, Human
Development Index (HDI), unemployment, human happiness, and quality
of life. Results indicate that higher distortive tax burdens tend to
correlate negatively with entrepreneurial dynamism and certain
well-being indicators, although outcomes depend heavily on public
spending efficiency. The paper discusses a proposal to recognise
(total or partial) deductibility of these tax payments as business
expenses in the relevant year. This would create an approximate
biennial relief cycle, conceptually modelled as a Lotka-Volterra
predator-prey dynamic of double adaptation, with the entrepreneur as
prey and the public system/government as predator. The study
concludes with a formal petition for technical, legal, and policy
debate in competent bodies, particularly in the Foral Community of
Navarre, Spain.
Keywords: Tax burden, deductibility of taxes, SMEs and self-employed, OECD, economic freedom, human development, Lotka-Volterra economic models, economic reality principle.
Introduction
Self-employed workers and family businesses face a structural tension: payments of personal income tax (IRPF/PIT) and social security contributions, although directly arising from economic activity, are deducted from business liquidity without full recognition as deductible expenses. This creates a mismatch between real cash flows and fiscal-accounting treatment, affecting the sustainability of SMEs (OECD, 2025). In most OECD countries, personal income tax is not deductible to avoid logical circularity, while social security contributions for the self-employed are often treated more favourably as necessary business expenses. However, ongoing debates persist regarding tax neutrality, proportionality, cash-flow effects, and the principle of causality linked to economic reality. Recent Spanish Supreme Court jurisprudence has shown greater flexibility, prioritising economic substance over excessive formalism in certain cases involving self-employed expenses. This proposal seeks improved correlation between accounting and tax treatment by allowing tax payments made from business funds to be recognised as deductible expenses. Such recognition could generate periodic relief approximately every two years, modellable as an adaptive predator-prey dynamic.MethodologyA qualitative-quantitative meta-analysis was conducted on global literature (fiscal, economic, and business studies in OECD/OMC contexts) combined with comparative analysis of secondary data. Primary sources include OECD Taxing Wages reports, Heritage Foundation Index of Economic Freedom, UN Human Development Index, World Happiness Report, World Bank data, and Tax Foundation analyses. Inclusion criteria focused on post-2015 studies addressing tax wedge, impact on SMEs, and correlations with growth, unemployment, and well-being. Countries with high versus low cumulative tax burdens (measured as tax-to-GDP ratio or tax wedge) were compared.
A conceptual Lotka-Volterra model was incorporated to simulate entrepreneur-government interaction cycles.
Results
OECD countries exhibit significant variability. The average tax wedge for a single average-wage worker stood at approximately 35% in recent years, with extremes ranging from Belgium (around 52%) to Chile (around 7%) (OECD, 2025).
Table 1: Comparative Examples (approximate data 2024-2025)
|
Country |
Tax Wedge (%) |
Tax Burden (% GDP approx.) |
Economic Freedom (Heritage) |
HDI (UN) |
Unemployment (%) |
Happiness (Ranking) |
Quality of Life |
|---|---|---|---|---|---|---|---|
|
Belgium |
52+ |
High (~45%) |
Medium |
Very High |
~6 |
Medium-High |
High |
|
Switzerland |
Low-Medium |
Moderate |
Very High (Top 3) |
Very High |
Low (~4) |
High |
Very High |
|
Chile |
~7 |
Low |
High |
High |
Medium |
Medium |
Medium-High |
|
United States |
Medium |
~26% |
High |
Very High |
~4-5 |
Medium-High |
High |
|
OECD Average |
~35 |
34-40% |
Variable |
High |
~5-6 |
Variable |
High |
Countries with higher economic freedom (lower distortive burdens) generally show better alignment with per capita growth, HDI, and life satisfaction, although Nordic countries demonstrate that high taxes combined with efficient spending can sustain strong well-being outcomes (Heritage Foundation, 2026).
Meta-analyses, such as Alinaghi and Reed (2020), indicate that a 10% tax increase is associated with approximately -0.2% annual GDP growth in negative fiscal packages, but can be neutral or positive when paired with productive spending.
Discussion
Scholars supporting greater deductibility and neutrality emphasise the principle of economic reality, ability-to-pay, and non-confiscatory taxation. Recognising payments from business treasuries as expenses would improve income-expense matching, enhance SME liquidity, and promote equity, consistent with comparative OECD doctrine. This approach could establish a biennial relief cycle, interpretable through a Lotka-Volterra framework: the entrepreneur (prey) periodically recovers from the fiscal system (predator), fostering mutual adaptation and dynamic sustainability (inspired by applications such as Goodwin, 1967; and modern extensions in market dynamics). Opposing views stress that non-deductibility of own-tax liabilities prevents circularity and potential arbitrage, maintaining a stable tax base and administrative simplicity—an international standard.
Poorly designed changes risk base erosion. Nevertheless, existing deductibility of social contributions and recent jurisprudential trends support pragmatic evolution toward greater alignment with real economic flows.
The proposal does not seek to eliminate taxation but to better align accounting treatment with actual cash movements, contributing to broader debates on fairness for self-employed workers and family businesses in Europe.
Annex:
General Petition, Complaint and Request for Debate on Tax
Matters
[Full original petition text by Mikel de Elguezabal Mendez
can be attached as a formal annex, adapted for submission to the
Foral Tax Authority of Navarre, Parliament of Navarre, and Chamber of
Comptos, requesting examination of the case, legal grounds, and
elevation for normative debate.]
References
Alinaghi, N., & Reed, W. R. (2020). Taxes and economic growth in OECD countries: A meta-analysis. Public Finance Review, 49(1), 3-40.
Goodwin, R. M. (1967). A growth cycle. In C. H. Feinstein (Ed.), Socialism, capitalism and economic growth. Cambridge University Press.
Heritage Foundation. (2026). 2026 Index of Economic Freedom. Washington, DC: The Heritage Foundation.
OECD. (2025). Taxing Wages 2025. OECD Publishing.
OECD. (2026). Taxing Wages 2026. OECD Publishing.
United Nations Development Programme. (various years). Human Development Report.
World Happiness Report. (various years). United Nations Sustainable Development Solutions Network.
Gandolfo, G. (2009). Economic Dynamics. 4th Edition. Springer. (Provides a comprehensive treatment of Lotka-Volterra equations and their applications to economic cycles and interactive systems).
Goodwin, R. M. (1967). A growth cycle. In C. H. Feinstein (Ed.), Socialism, capitalism and economic growth. Cambridge University Press.
Marasco, A., & Romano, A. (2018). Interacting markets and the emergence of complex dynamics: A Lotka-Volterra approach. Journal of Economic Interaction and Coordination.
Vadasz, V. (2022). An economic application of the Lotka-Volterra predator-prey model. Undergraduate Thesis, Franklin & Marshall College.
Cerqueti, R., Tramontana, F., & Ventura, M. (2015). Market share dynamics using Lotka–Volterra models. Technological Forecasting and Social Change, 91, 340-351.
OECD (2015). Taxation of SMEs in OECD and G20 Countries. OECD Publishing.
OECD (2023). Tax Policy and Inclusive Growth. OECD Tax Policy Studies.
European Commission (2022). Annual Report on Taxation 2022. Directorate-General for Taxation and Customs Union.
Studies on dynamic fiscal models: works applying predator-prey frameworks to taxpayer-regulator interactions and fiscal compliance cycles (e.g., applications in tax evasion modelling by authors such as Hashimzade et al., 2019).
INSTANCIA GENERAL DE PETICIÓN, QUEJA Y SOLICITUD DE DEBATE EN MATERIA TRIBUTARIAD./
Dña. Mikel de Elguezabal Mendez
DNI: 73492846A
Domicilio a efectos de notificaciones: Plaza Ferial AP 008, Uharte, Navarra, 31620
Teléfono (WhatsApp): 601312297
Correo electrónico: a6labs@gmail.com
EXPONE:Que en mi condición de autónomo y empresario, junto con mi cónyuge, hemos satisfecho en el ejercicio 2026 importes significativos en concepto de Impuesto sobre la Renta de las Personas Físicas (IRPF Foral) y cuotas de Seguridad Social, derivados directamente de la actividad económica desarrollada.Estos pagos se realizan con cargo a la tesorería de la empresa familiar, afectando directamente a su liquidez real, a la capacidad de reinversión y a la sostenibilidad económica de la unidad familiar.Que existe una omisión relevante en el tratamiento contable y fiscal al no reconocerse como gasto deducible los pagos de impuestos y cotizaciones realizados desde fondos empresariales. Esta falta de correlación entre los flujos económicos reales y el tratamiento fiscal genera distorsiones que perjudican a las pymes y autónomos.Estudios comparados en países OCDE muestran que elevadas cargas fiscales acumuladas correlacionan negativamente con el dinamismo empresarial, el crecimiento económico y ciertos indicadores de bienestar (desarrollo humano, desempleo, felicidad y calidad de vida), especialmente cuando el sistema no mantiene una adecuada neutralidad y correlación con la realidad económica.SOLICITO:Que la Hacienda Foral de Navarra admita esta instancia, examine el caso y me informe del fundamento normativo exacto que impide la deducibilidad de estos pagos, valorando la emisión de una consulta vinculante o la revisión de criterio.
Que se eleve esta cuestión al Parlamento de Navarra (Comisión de Hacienda y Presupuestos) para debatir una posible reforma o aclaración normativa que permita el reconocimiento, total o parcial, de la deducibilidad de estos gastos como propios de la actividad empresarial, mejorando la correlación ingresos-gastos y la equidad del sistema.
Que la Cámara de Comptos de Navarra tome conocimiento de esta petición en el marco de sus funciones fiscalizadoras, evaluando si el actual tratamiento genera efectos no deseados en la economía real de las pymes y autónomos navarros.
Que se me mantenga informado de todas las actuaciones y se me trasladen las resoluciones e informes emitidos.
FUNDAMENTOS:Principio de realidad económica (art. 13 LGT y normativa foral).
Principio de capacidad contributiva y no confiscatoriedad (art. 31 Constitución Española).
Necesidad de correlación entre ingresos y gastos en la actividad económica.
Evidencia de meta-análisis en países OCDE que relacionan una mejor neutralidad fiscal con mayor libertad económica, desarrollo humano y bienestar.
Posibilidad de generar un ciclo de alivio fiscal aproximado cada dos años, que podría interpretarse como una dinámica adaptativa positiva entre el emprendedor y el sistema público.
En Pamplona/Iruña, a 26 de junio de 2026.Firma:
Mikel de Elguezabal Mendez
DNI 73492846A
OROKORREKO ESKAERA, KEXA ETA ZERBITZU TRIBUTARIOARI BURUZKO DEBATE-ESKAERA
Jauna/Andrea Mikel de Elguezabal Mendez
NAN: 73492846A
Jakinarazpenetarako helbidea: Plaza Ferial AP 008, Uharte, Nafarroa, 31620
Telefonoa (WhatsApp): 601312297
Posta elektronikoa: a6labs@gmail.com
ADIERAZTEN DU:Autonomo eta enpresari gisa, nire ezkontidearekin batera, 2026. urtean kopuru esanguratsuak ordaindu ditugula Pertsona Fisikoen Errentaren gaineko Zerga Forala (IRPF Forala) eta Gizarte Segurantzako kuotak, enpresa-jardueratik zuzenean sortutakoak.Ordainketa horiek enpresa-familiarraren kutxategitik egiten dira, enpresaren likidezia errealari, berriro inbertitzeko gaitasunari eta familia-unitatearen iraunkortasun ekonomikoari eragiten diotela.Tratamendu kontable eta fiskalean huts nabarmena dagoela uste dut, enpresa-funtsen bidez ordaindutako zerga eta kotizazioak gastu dedukigarri gisa aitortzen ez direlako. Enpresaren fluxu ekonomiko errealen eta tratamendu fiskalaren arteko korrelazio falta honek distortsioak sortzen ditu, Nafarroako ETE eta autonomoen kalterako.OCDEko herrialdeetan egindako azterketa konparatuek erakusten dute zama fiskal metatu handiek erlazio negatiboa dutela dinamismo enpresarialarekin, garapen ekonomikoarekin eta ongizate-adierazle batzuekin (garapen gizatiarra, langabezia, zoriontasuna eta bizitza-kalitatea).ESKATZEN DUT:Nafarroako Foru Ogasunak eskaera hau onartzea, kasua aztertzea eta enpresa-funtsen bidez ordaindutako ordainketen dedukzioa eragozten duen oinarri normatiboa jakinaraztea, kontsulta lotesle bat edo irizpide-berrikuspena baloratuz.
Gai hau Nafarroako Parlamentura (Hacienda eta Aurrekontuen Batzordea) igotzea, arau-aldaketa edo interpretazio-argibide bat eztabaidatzeko, gastu horien dedukzioa (guztizkoa edo partziala) aintzat hartzeko, diru-sarrera-gastu korrelazioa eta sistemaren berdintasuna hobetuz.
Nafarroako Kontuen Ganberak eskaera hau jakin dezala, bere kontrol- eta aholkularitza-funtzioen esparruan, eta ebalua dezala tratamendu honek nahi ez diren ondorioak sortzen dituen ETE eta autonomoen ekonomia errealan.
Abiarazitako jarduera guztien berri eman dakidala eta emandako ebazpen eta txostenak bidal dakizkidala.
OINARRIAK:Ekonomia-errealitatearen printzipioa.
Gaitasun contributiboaren printzipioa eta konfiskatzaile ez izatea.
Diru-sarreren eta gastuen korrelazioa.
OCDEko meta-analisien ebidentzia.
Enpresaria eta sistema publikoaren arteko dinamika adaptatibo positiboa sortzeko aukera.
Uharte, 2026ko ekainaren 26an.Sinadura:
Mikel de Elguezabal Mendez
NAN 73492846A3.
GENERAL PETITION, COMPLAINT AND REQUEST FOR DEBATE ON TAX MATTERS
Mr. Mikel de Elguezabal Mendez
ID: 73492846A
Address for notifications: Plaza Ferial AP 008, Uharte, Navarra, 31620, Spain
Telephone (WhatsApp): 601312297
Email: a6labs@gmail.com
STATES:That as a self-employed worker and entrepreneur, together with my spouse, we have paid significant amounts in Personal Income Tax (Foral IRPF) and Social Security contributions in 2026, derived directly from our economic activity.These payments are made from the company’s treasury, directly affecting its real liquidity, reinvestment capacity, and the economic sustainability of the family unit.That there is a relevant omission in the current accounting and tax treatment by not recognising as deductible business expenses the tax and contribution payments made from business funds. This lack of correlation between real cash flows and fiscal treatment creates distortions that harm SMEs and self-employed workers.Comparative studies in OECD countries show that high cumulative tax burdens tend to correlate negatively with entrepreneurial dynamism, economic growth, and certain well-being indicators (human development, unemployment, happiness, and quality of life), particularly when the system does not maintain adequate neutrality and correlation with economic reality.REQUESTS:That the Foral Tax Authority of Navarre admit this petition, examine the case, and inform me of the exact legal grounds preventing the deductibility of these payments, considering the possibility of issuing a binding consultation or reviewing its interpretive criteria.
That this matter be raised before the Parliament of Navarre (Finance and Budget Committee) to debate a possible regulatory reform or clarification allowing the (total or partial) deductibility of these expenses as business costs, improving income-expense correlation and the fairness of the tax system.
That the Chamber of Comptos of Navarre be informed of this petition within its auditing and advisory functions, assessing whether the current treatment produces undesired effects on the real economy of Navarrese SMEs and self-employed workers.
To be duly informed of all proceedings and receive copies of any resolutions or reports issued.
GROUNDS:Principle of economic reality.
Ability-to-pay principle and non-confiscatory taxation.
Correlation between income and expenses.
Evidence from OECD meta-analyses linking better fiscal neutrality with greater economic freedom, human development, and well-being.
Potential to create a positive adaptive fiscal relief cycle approximately every two years between the entrepreneur and the public system.
In Pamplona, 26 June 2026.Signature:
Mikel de Elguezabal Mendez
ID 73492846A
