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Taxation and distribution of income in Brazil: new evidence from personal income tax data

Author

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  • Sérgio Wulff Gobetti
  • Rodrigo Octávio Orair

Abstract

This paper presents a critical analysis of income and profit taxes in Brazil, arguing that measures adopted in the 1980s and 1990s, as a result of mainstream recommendations, hindered the redistributive role of taxes. An examination of tax data reveals a high degree of top income concentration, low tax progressivity and violations of the principles of horizontal and vertical equity. The main reason for these distortions is the complete tax exemption of dividends, a benefit that is very rarely seen in developed countries. We propose a return to a progressivity-focused tax reform plan, a theme that has returned as a focus of debates with Piketty (2014) JEL classification: H24; N46; E62.

Suggested Citation

  • Sérgio Wulff Gobetti & Rodrigo Octávio Orair, 2017. "Taxation and distribution of income in Brazil: new evidence from personal income tax data," Brazilian Journal of Political Economy, Center of Political Economy, vol. 37(2), pages 267-286.
    • Handle: RePEc:ekm:repojs:v:37:y:2017:i:2:p:267-286:id:132
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    Citations

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    Cited by:

    1. Diogo Ramos Coelho, 2020. "Brazil’s economic reform roads," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 55(2), pages 80-91, April.
    2. Marcia C Castro & Andres Baeza & Cláudia Torres Codeço & Zulma M Cucunubá & Ana Paula Dal’Asta & Giulio A De Leo & Andrew P Dobson & Gabriel Carrasco-Escobar & Raquel Martins Lana & Rachel Lowe & Anto, 2019. "Development, environmental degradation, and disease spread in the Brazilian Amazon," PLOS Biology, Public Library of Science, vol. 17(11), pages 1-8, November.
    3. Pedro Herculano Guimarães Ferreira de Souza & Marcelo Medeiros, 2017. "The concentration of income at the top in Brazil, 2006–2014," One Pager 370, International Policy Centre for Inclusive Growth.
    4. Gwaindepi, Abel, 2019. "Domestic revenue mobilization in Sub-Saharan Africa and Latin America: A comparative analysis since 1980," Lund Papers in Economic History 209, Lund University, Department of Economic History.
    5. Abel Gwaindepi, 2021. "Domestic revenue mobilisation in developing countries: An exploratory analysis of sub‐Saharan Africa and Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(2), pages 396-421, March.

    More about this item

    Keywords

    Income tax; tax progressivity; tax reform; income distribution; tax data;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • N46 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Latin America; Caribbean
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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