IEE advocates for tax cuts to boost investment and employment

The Instituto de Estudios Económicos (IEE), the research center for the Spanish employers' association CEOE, has released a new study titled ‘The Laffer Curve and Supply-Side Economics: Tax Cuts for Growth’. Developed in collaboration with the Instituto Juan de Mariana, the report argues that high tax pressure acts as a deterrent to investment, productivity, and employment.

Íñigo Fernández de Mesa, president of the IEE, has called for a “profound and complete” revision of the fiscal system. The study posits that economic decisions are heavily influenced by the institutional, regulatory, and fiscal environment. To foster innovation and job creation, the authors suggest a combination of competitive taxation, efficient public spending, monetary stability, and a proportionate regulatory environment.

The research utilizes the concept of the Laffer Curve to suggest that tax incentives can drive economic expansion. However, the report also acknowledges complexities, noting that determining the optimal tax rate depends on various factors including the economic cycle and specific national characteristics.