The Effects of Brazil's Taxation and Social Spending on the Distribution of Household Income

Sean Higgins, Claudiney Pereira*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

24 Scopus citations

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 nonlabor 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 antipoverty programs, these transfers have relatively low per capita amounts and a large portion of direct transfer beneficiaries are nonpoor. 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.

Original languageEnglish (US)
Pages (from-to)346-367
Number of pages22
JournalPublic Finance Review
Volume42
Issue number3
DOIs
StatePublished - May 2014
Externally publishedYes

Keywords

  • Brazil
  • fiscal policy
  • inequality
  • poverty

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration

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