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

Author

Listed:
  • Sérgio Wulff Gobetti

    (Técnico de Planejamento e Pesquisa do IPEA.)

  • Rodrigo Octávio Orair

    (Técnico de Planejamento e Pesquisa do IPEA e pesquisador associado ao International Policy Centre for Inclusive Growth (IPC-IG).)

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, February.
    • Handle: RePEc:ekm:repojs:v:37:y:2017:i:2:id:95236
    DOI: 10.1590/0101-31572017v37n02a01
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    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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