Uruguay has a state that consumes 33% of GDP and an effective tax burden of 28%. To give you an idea: Sweden, the Nordic paradise so often cited by progressives when they want higher taxes, has a tax burden of 42% and public spending of 49% of GDP... but with a per capita GDP of 60,000 dollars.
Uruguay, meanwhile, has 23,000 dollars per capita (PPP 2024, IMF). In other words: we pay almost like Europeans, but we earn like Latin Americans.
On top of that, we have a Gini coefficient of 0.40, practically identical to Chile or Costa Rica, countries that spend considerably less in relation to the size of their economies. That means we do not even achieve the "social justice" that supposedly justifies having an elephantine state.
Summed up in a cruel but accurate phrase:
In Uruguay, the state takes almost as much from you as in Denmark, gives you services like Paraguay, and asks you to compete in an open market with Brazil (215 million inhabitants) and Argentina (46 million), being just 3.5 million people who, moreover, are aging at record speed.
There are still people—politicians, armchair economists, and Twitter users with a Palestinian flag in their bio—who repeat as a mantra that "the solution is to tax the richest 1% more," as if the problem were that the state collects too little and not that it spends poorly, spends too much, and spends on anything except what generates growth.
Because when you look at the details, the situation is even worse:
- 70% of public spending goes to pensions and public sector salaries.
- We have the highest retiree-to-active worker ratio in Latin America after... nothing, we are the absolute champion.
- The state is the country's main employer and pays salaries 40-50% higher than the private sector for the same qualifications.
- Every year, more political positions and more public companies are created that lose money hand over fist (UTE is the exception that proves the rule).
- On top of that, BPS has been bankrupt for decades, but no one touches the taboo of retirement age or contribution requirements.
So no, comrade, the problem is not that the 1% pays too little. The problem is that the remaining 99% supports a state that:
a) extracts resources from them as if we were Norway,
b) gives them services and salaries as if we were Bolivia,
c) and asks them to compete in productivity with countries that have scale, internal markets, and young populations.
Raising taxes on the "1%" (who already pay 70% of the personal income tax) solves nothing. It is like pouring another fielder of water onto the Titanic thinking that will make it float.
The only thing it achieves is to scare away investment, encourage the emigration of the most productive, and continue fattening a public machine that is already obese.
Uruguay needs the opposite: to reduce structural public spending (yes, reform pensions, yes, lower political salaries, yes, privatize what loses money, yes, reduce the number of ministries and agencies), lower taxes to be competitive in the region, and stop living in the fantasy that we can have a Scandinavian welfare state with Japan's demographics and Latin America's productivity.
Because continuing like this only leads to one outcome: more young people leave (150,000 have already left in the last 10 years), fewer companies invest, the deficit keeps growing, and in 20 years we will have a state that is 50% of GDP... with a per capita GDP of 15,000 dollars and a country of 2.8 million retirees.
At that point, congratulations: we will have achieved total equality. Equality in poverty.
