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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

    (IPC-IG)

  • Rodrigo Octávio Orair

    (IPC-IG)

Abstract

This paper presents a critical analysis of income and profit taxes in Brazil, demonstrating how measures adopted in the 1980s and 1990s, as a result of mainstream recommendations, hindered the redistributive role of taxes in the country. Investigation of tax data reveals a high degree of income concentration at the top of the distribution, low progressivity and violations of the principles of horizontal and vertical equity. The main reason for these distortions is the complete tax exemption of dividends for shareholders, 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). (…)
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Suggested Citation

  • Sérgio Wulff Gobetti & Rodrigo Octávio Orair, 2016. "Taxation and distribution of income in Brazil: new evidence from personal income tax data," Working Papers 136, International Policy Centre for Inclusive Growth.
    • Handle: RePEc:ipc:wpaper:136
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    References listed on IDEAS

    as
    1. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," PSE-Ecole d'économie de Paris (Postprint) halshs-00754875, HAL.
    2. Atkinson, A. B. & Piketty, Thomas (ed.), 2010. "Top Incomes: A Global Perspective," OUP Catalogue, Oxford University Press, number 9780199286898, Decembrie.
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    Cited by:

    1. Pedro Herculano Guimarães Ferreira de Souza & Marcelo Medeiros, 2017. "The concentration of income at the top in Brazil, 2006-2014," Working Papers 163, International Policy Centre for Inclusive Growth.
    2. 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.
    3. 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.
    4. Palma, J. G., 2019. "Why is inequality so unequal across the world? Part 2 The diversity of inequality in market income - and the increasing asymmetry between the distribution of income before and after taxes and transfer," Cambridge Working Papers in Economics 19100, Faculty of Economics, University of Cambridge.
    5. Marc Morgan, 2018. "Income inequality, growth and elite taxation in Brazil: new evidence combining survey and fiscal data, 2001–2015," Working Papers 165, International Policy Centre for Inclusive Growth.

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    More about this item

    Keywords

    Taxation; distribution; income in Brazi; evidence; tax data; tax reform; tax progressivity;
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