The Impact of Taxes and Social Spending on Inequality in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An Overview
AbstractHow much redistribution and poverty reduction is being accomplished in Latin America through social spending, subsidies, and taxes? Standard fiscal incidence analyses applied to Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay using a comparable methodology yields the following results. Direct taxes and cash transfers reduce inequality and poverty by nontrivial amounts in Argentina, Brazil, and Uruguay but less so in Bolivia, Mexico, and Peru. While direct taxes are progressive, the redistributive impact is small because direct taxes as a share of GDP are generally low. Cash transfers are quite progressive in absolute terms, except in Bolivia where programs are not targeted to the poor. In Bolivia and Brazil, indirect taxes more than offset the poverty-reducing impact of cash transfers. When one includes the in-kind transfers in education and health, valued at government costs, they reduce inequality in all countries by considerably more than cash transfers, reflecting their relative size.
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Bibliographic InfoPaper provided by Tulane University, Department of Economics in its series Working Papers with number 1316.
Length: 29 pages
Date of creation: Aug 2013
Date of revision:
fiscal incidence; inequality; poverty; taxes; social spending; Latin America;
Find related papers by JEL classification:
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-17 (All new papers)
- NEP-PBE-2014-01-17 (Public Economics)
- NEP-PUB-2014-01-17 (Public Finance)
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- Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013.
"Comparing the incidence of taxes and social spending in Brazil and the United States,"
316, ECINEQ, Society for the Study of Economic Inequality.
- Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Working Papers 1317, Tulane University, Department of Economics.
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