CIPR | Center For Inter-American Policy & Research

Tulane University

CEQ Working Paper No 7: The Effects of Brazil's High Taxation and Social Spending on the Distribution of Household Income


The Effects of Brazil’s High Taxation and Social Spending on the Distribution of Household Income
Working Paper No. 7

A working document by:
Sean Higgins
Tulane University
Claudiney Pereira
Tulane University

Abstract
Relative to other countries in Latin America, Brazil has high rates of taxation and large social spending. We estimate the redistributive effect of fiscal policy on income distribution and poverty in Brazil using household survey data that contain detailed information about many labor and non-labor income sources, direct taxes paid, contributions to the pension system, transfers received, use of public education and health services, and consumption. On the spending side, we find that although Brazil has some well-targeted anti-poverty programs, these transfers have relatively low per capita amounts and a large portion of direct transfer beneficiaries are non-poor. As a result, inequality and poverty reduction are low relative to Brazil’s spending. On the tax side, indirect taxes paid by the poor often surpass the direct transfer and indirect subsidy benefits they receive.

Access the working document here:
Updated May 2013
CEQ Working Paper No 7: The Effects of Brazil’s High Taxation and Social Spending on the Distribution of Household Income

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