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    Urban property, expropriation and wealth concentration in Brazil
    (Southern Centre for Inequality Studies, 2023-08-14) Fix, Mariana; Constantino, João Paulo; Prado, André Doca
    The complete process of housing production is an important element in defining patterns of inequality. This paper aims to identify and characterise changes and continuities in the real estate wealth, with a focus on the residential segment. In doing so, we observed several two-way interactions, situating them in the long duration of the constitution of highly unequal structures in Brazil. In particular, we describe the reconstitution of the credit system by the Workers' Party government, in the 2000s, as a moment when interactions with the theme of inequality became more complex. The reorganisation of the regulatory framework and the expansion of housing credit in the 2000s generated a substantial increase in real estate activity and created a housing boom. In the text, we present three rounds of IPOs from real estate developers and discuss the most significant (2006-2008). While this round originated in the increase in real estate credit, its sustainability only occurred thanks to a housing policy that mobilised billions of reais (BRL) in subsidies for the construction of millions of houses. The amount was unprecedented and allowed the policy to reach social strata that had not had access to formal housing before – in this sense, it responded to a social and political demand. On the other hand, this volume of public funds was also significant for the financial real estate circuit. This increase in scale gave more power to homebuilders that decisively influenced the design of the housing programme. Some effects of this conflictive and multidimensional process on the struggle for the right to the city are discussed throughout the text.
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    Capital and Politics: Links and Distance During the Bolsonaro Government
    (Southern Centre for Inequality Studies, 2023-07-19) Bedê, Francisco; Domingues, José Maurício; Herz, Mônica; Gonçalves, Guilherme Leite; Rodríguez, Maria Elena
    The present article analyses the relation between the state and the political system, on the one side, and capital and capitalists, on the other, in Brazil, especially under the Bolsonaro government. Using data about the boards of directors of Brazil’s main companies and of the main government ministries, it brings out what amounts to an indirect relation between the two sides of this equation. It mobilizes both theoretical and empirical arguments in order to point to the idea of political dimension and political processes as a possible path to apprehend the more complex and less immediate ties between capital and politics. This does not belie the connections between them, but contradicts most of the literature, which sees a rather direct connection between them.
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    Mapping Recent Trends in the Distribution of Wealth in Brazil
    (Southern Centre for Inequality Studies, 2023-07-19) Lavinas, Lena; Cordilha, Ana Carolina; Bressan, Lucas; Rubin, Pedro
    The interest in mapping wealth and how it is concentrated is relatively recent in Brazil, even though Brazilian society remains one of the most unequal in the world, when inequality is measured by taking only labour income and social benefits. When it comes to wealth, the picture is even more appalling. The present paper describes the recent evolution of financial and non-financial personal wealth in Brazil. The aim is to indicate how the different forms of wealth - in particular the strong expansion of fictitious capital - reshape inequalities in Brazil. It starts by contextualizing the difficulties encountered in accessing data on stocks of wealth in Brazil. In the absence of surveys on wealth, the paper describes how pensions and rental income are appropriated by income strata, using research on household spending. It then highlights how land, a real asset par excellence, is being transformed into a financial asset, attracting institutional investors and international capital. Finally, it summarizes some preliminary ideas on how the transition in the nature of wealth, driven by a financialized accumulation regime, impacts the framework of structural inequalities that have long characterized the Brazilian society.
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    The Brazilian Tax System: Regressive and Biased
    (Southern Centre for Inequality Studies, 2023-07-12) Bressan, Lucas; Cordilha, Ana Carolina; Constantino, João Paulo; Rubin, Pedro
    Brazil's tax system plays a central role in perpetuating and deepening the country's alarming levels of income and wealth inequality. The goal of this article is to unpack the regressive and biased nature of the Brazilian tax system. It combines data from national and international institutions for the past two decades to provide a comprehensive understanding of the tax system's role in shaping income and wealth gaps. The article starts by discussing why income and property taxation, potentially progressive instruments, lacks effectiveness and make the poorest groups contribute proportionally more than the upper classes. It then argues that many forms of real estate and asset properties are not taxed as much as in other countries, which curbs the possibility of reducing social disparities. To end, the study points out some of the major flaws that prevent the system from being effectively redistributive, including issues related to tax waivers, tax evasion, and the difficulties in tackling financial wealth. The conclusion suggests that changes such as updating income tax brackets, increasing taxation on large properties and fortunes, and implementing taxes on financial investments would foster a more equitable society in Brazil.
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    Brazil Colonial Legacy and Growth Patterns
    (Southern Centre for Inequality Studies, 2023-07-12) Lena, Lavinas; Domingues, José Maurício; Gonçalves, Guilherme Leite; Cordilha, Ana Carolina; Bedê, Francisco; Bressan, Lucas; Constantino, João Paulo; Rubin, Pedro
    This paper provides a very concise view of the trajectory of Brazil since it became a republic. It goes through the 20th century and into the 21st century to systematize how the different phases of economic development reproduced and reformatted the inequalities inherited from the country´s colonial-slave period. Its objective is to provide a timeline, framed by the structural transformations in the economy and in the political regime, which has shifted between democratic and authoritarian periods, always with a strong role for the State. In addition to characterizing the industrial accumulation pattern of what was dubbed "developmentalism", and the rupture with this pattern caused by the financialization of the economy, in the midst of the democratization process of the country, starting in the mid-1980s, the paper briefly describes how the social question evolved over time and how the oligarchic power structures remained dominant in the state apparatus and in the political system.
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    Wealth elites and their accumulation dynamics: Hyderabad City Region
    (Southern Centre for Inequality Studies, 2023-07-05) Prasad, Purendra; Rambarki, Raviteja
    Majority of the wealth elites from Hyderabad city region emerged during the reform period (1995- 2014), benefiting from the neo-liberal policies, political patronage and nexus with caste and regional networks. In post-2014, while wealth accumulation is accounted for in terms of high growth in sectors such as IT, pharmaceuticals and real estate, our field accounts indicate that large-wealth creation also occurred through contracts in irrigation projects such as Kaleswaram, Polavaram, and privatisation of seaports and infrastructure projects. While the early structural transformation of wealthy elites from agro-based industrial economy to service sector was facilitated by agrarian surplus and land, now the structural shift within the service sector is more complex. The regional and sub-regional story of wealth formation indicates that it is not just the broader economic reforms that have brought about this change, but the structural shift from the political patronage of business to the business patronage of the political or political nexus with business. Taking into consideration the agrarian background of elites and subsequent emergence of professional classes on one hand, and diverse trajectories of business elites on the other, this paper tries to explain the current wealth-accumulation dynamics in Hyderabad City region through a political economy perspective.
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    Wealth elites of Kolkata
    (Southern Centre for Inequality Studies, 2023-06-28) Thakurata, Saswata Guha; Bhowmik, Manas Ranjan; Basu, Riona
    In this paper, focusing on the city of Kolkata, we present a narrative concerning - a. The caste-class-ethnicity intersectionality with respect to wealth ownership; b. The sectoral dimension of wealth creation; and c. the spatial implications of the process of wealth accumulation. We study this with reference to the transition through various regimes of accumulation (pre-colonial, colonial, post-independence Nehruvian regime and post-independence neoliberal regime). We have collected data from multiple sources (including Hurun List, various secondary sources, primary data collection, and interviews). It is found that a relatively larger number of 1000 cr+ Primary Wealth Owners (PWO), as per the Hurun list, are involved in Metals and Mining sector activities, followed by sectors such as Textiles, Apparels & Accessories. PWOs from the Hurun list are diverse in terms of their wealth profile, sectoral involvement and also their social identities (e.g., community). The analysis of family background and educational attainment and affiliation, demonstrates how the location of birth tends to become critical both socially and economically. The ethnic, caste and religious dimensions of the accounting of wealth elites in Kolkata are unavoidable. The wealthy elite minority is overpopulated by the Marwaris. Bengalis are scarcely there. Religion wise this group is mainly Hindu dominated.
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    Wealth elites in Delhi-NCR
    (Southern Centre for Inequality Studies, 2023-06-28) Thampi, Anjana; Anand, Ishan
    Delhi-National Capital Region (NCR) is an ever-expanding inter-state planning region that has occupied an important place in the history of the South Asian sub-continent. Wealth inequality is the highest in this region of the country, as per large-scale household sample surveys. We study the evolution of wealth in this region using secondary data, primary data collection, and detailed interviews. Our interviews of key informants and case studies of wealthy elites revealed five key themes: real estate, land, and farmhouses; caste and community networks; start-ups; politics and wealth creation; and investment in educational institutions. Our interviews revealed that there were three categories of elites who derived their wealth from land in Delhi NCR: land with traditional business families; the ‘babu-brigade’ that includes the bureaucrats and professionals who bought government land for a pittance between the 1960s and the 1980s; and traditional agricultural communities. Our analysis of the trajectory of wealth accumulation of elites over time reveals certain key themes and processes that have enabled the reproduction, expansion, or shrinking of wealth.
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    Wealth and its acummulation in Bombay/Mumbai
    (Southern Centre for Inequality Studies, 2023-06-21) Motiram, Sripad; Limaye, Kiran
    This paper analyses wealth in Bombay/Mumbai by considering three historical phases: pre-colonial and colonial (sixteenth century-1947), independence to pre-liberalisation (1947-91) and post-liberalisation (1991-present). For the first phase, our geographical focus is Western India and for later phases, it is Mumbai Metropolitan Region and Pune. We rely on various sources: historical accounts, secondary statistical databases, secondary literature and interviews with key informants and wealth owners. We divide wealth owners into three groups: 1000 crores and higher, 1000-100 crores and less than 100 crores (a fuzzy threshold). Colonialism created a wealthy elite through trade and newer industries. The pre-liberalisation period, saw consolidation by some of these (e.g. Tatas) and emergence of new players (e.g. Ambani), who used the regulatory framework. The post-liberalisation phase, created newer opportunities through relaxed regulation and greater space for private sector and foreign capital. The wealth story of Bombay/Mumbai differs from that of other Indian cities. Bombay is essentially a colonial product, and trade (particularly in opium) played a significant role in creating the city and shaping wealth. Banking and finance are much more important for wealth and its accumulation in Mumbai, and this has created a distinct wealth profile for the city.
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    Mapping the wealth elites of India
    (Southern Centre for Inequality Studies, 2023-06-21) Jodhka, S. Surinder; Vakulabharanam, Vamsi
    Exploration of extreme wealth concentration and wealth elite of a given society/nation-state provides a useful ‘lens’ to the understanding of social, economic, and political processes. Besides helping in exploring economic inequities, such an exercise could also help in a better understanding of the social and political dynamics of a given society. Part of a broader comparative study supported through the Southern Centre for Inequality Studies, University of Witwatersrand, South Africa, the paper explores the processes that produce, expand/dissolve and reproduce the extreme concentration of wealth in the context of the institutional and social structures in India. The study engages with the historical and empirical processes of big wealth India by (1) mapping the historical and contemporary processes through which wealth elites have been created; (2) the changing nature of their social profile over time and across regions of the country; (3) patterns and dynamics of social ascription in the processes of wealth expansion, shrinkage, and reproduction. Thus, besides exploring the historical processes of wealth formation and mapping big wealth, the study also attempts to document spatial variations across different regions of India. Primary fieldwork for the study was carried out in four city regions, selected from different parts of contemporary India: Mumbai, Hyderabad, Kolkata, and Delhi.
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    A Wealth Tax for South Africa
    (2021-01) Chatterjee, Aroop; Czajka, Léo; Gethin, Amory
    This paper considers the feasibility of implementing a progressive wealth tax to collect additional government revenue to both reinforce fiscal sustainability in the wake of the COVID-19 crisis and reduce persistent extreme inequality in South Africa. Drawing on our new companion paper, we first identify the tax base and discuss the design of potential tax schedules. Testing alternative tax schedules, we estimate how much additional revenue could be collected from a progressive tax on the top 1% richest South Africans. Our results show that under conservative assumptions, a wealth tax could raise between 70 and 160 billion Rands—1.5% to 3.5% of the South African GDP.We discuss in turn how sensitive our estimates are to assumptions on (1) mismeasurement of wealth and (2) tax avoidance and evasion, based on the most recent tax policy literature. We examine technical issues related to the enforcement of the tax, and how third-party reporting and pre-filled declarations could be used to optimize measurement of taxable wealth and minimize evasion and avoidance opportunities. Finally, we explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth.
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    Estimating the Distribution of Household Wealth in South Africa
    (2020-04) Chatterjee, Aroop; Czajka, Léo; Gethin, Amory
    This paper estimates the distribution of personal wealth in South Africa by combining tax microdata covering the universe of income tax returns, household surveys and macroeconomic balance sheets statistics. We systematically compare estimates of the wealth distribution obtained by direct measurement of net worth, rescaling of reported wealth to balance sheets totals, and capitalisation of income flows. We document major inconsistencies between available data sources, in particular regarding the measurement of dividends, corporate assets and wealth held through trusts. Both household surveys and tax data remain insufficient to properly capture capital incomes. Notwithstanding a significant degree of uncertainty, our findings reveal unparalleled levels of wealth concentration. The top 10 per cent own 86 per cent of aggregate wealth and the top 0.1 per cent close to one third. The top 0.01 per cent of the distribution (3,500 individuals) concentrate 15 per cent of household net worth, more than the bottom 90 per cent as a whole. Such high levels of inequality can be accounted for in all forms of assets at the top end, including housing, pension funds and other financial assets. Our series show no sign of decreasing wealth inequality since apartheid: if anything, we find that inequality has remained broadly stable and has even slightly increased within top wealth groups.
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    A Wealth Tax for South Africa
    (2018-01) Terreblanche, Sampie