The Brazilian Tax System: Regressive and Biased

Bressan, Lucas
Cordilha, Ana Carolina
Constantino, João Paulo
Rubin, Pedro
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Southern Centre for Inequality Studies
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.
Bressan, L., Cordilha, A.C., Constantino, J.P and Rubin, P. 2023. The Brazilian Tax Sytem: Regressive and Biased. Wealth Inequality Working Paper | Number 54