TAX BURDEN ON LABOR IN BRAZIL: LEVEL, DISTRIBUTION AND STRUCTURE

Abstract

This paper investigates the level, distribution and structure of the tax burden on labor in Brazil, showing how many and what types of workers are affected by different levels of taxation. The results show a significant variation in the level and composition of the tax burden among subgroups of workers. For example, the effective tax rate for a worker earning the legal minimum wage and having three or more children is little more than a third of the tax rate for a worker with earnings above thirty minimum wages. The study also shows that, compared to the European Union and OCDE countries, the Brazilian tax wedge on labor is one of the lowest, particularly for higher wages.