ALTERNATIVES TO REDUCING THE INCOME TAX RETURN OF INDIVIDUALS IN BRAZIL

Abstract

Brazil, in the recent past, has not programmed the reduction of income inequalities
through a progressive tax policy. On the contrary, in the 1990s, it followed the
guidelines of Multilateral Organizations such as the International Monetary Fund, to
reduce the marginal rates of Personal Income Tax (IRPF), further restricting the distributive
role of this tax and, in the years 2000, opted from the perspective of spending, as an
alternative to the reduction of income inequality in the country. Given this and the view
of the Theory of Equitable Taxation and from the constitutional principles of isonomy
and contributory capacity the regressivity of the IRPF is analyzed in spite of progressive
marginal rates. It is observed that the Effective Rate has a decreasing relation with the increase of income. From incomes above 40 SM, the higher the income, the lower the effective rate of the IRPF. While for taxpayers with income above 320 SM the effective income tax rate is 2.1%, for taxpayers with a income range between 30 and 40 SM, it is 10.5%, that is five times higher. From this, we present three simulations for the updating of the IRPF Table to cover the iniquities of this tax, consequently, increasing the collection and contributing with the confrontation of the fiscal crisis of the State.