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Werner Baer and Antonio Fialho Galvão, Jr.


First Author :

Werner Baer
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street, 218 DKH, M/C 706
Champaign, IL 61820

Second Author :

Antonio Fialho Galvão, Jr.
University of Illinois at Urbana-Champaign, Department of Economics
1206 S. Sixth Street
484 Wohlers Hall
Champaign, IL 61820

Abstract :
This article attempts to explain the seeming paradox of a country with a high tax burden and a continually concentrated distribution of income. Using a nonparametric density estimation, it is shown that Brazil does not conform to the characteristics of most countries in terms of income tax and government expenditure patterns. By means of a structural quantile regression model to analyze the distributional impact of these expenditures, it is shown that Brazil’s fiscal system has a relatively low impact on the distribution of income. To the extent that it does have some impact, it is noted that both the country’s tax and expenditure structure are, in part, responsible for the country’s continuous concentration of income.
Keywords :
Brazil, government expenditures, income distribution, taxes
Footnotes & Acknowledgements :
*CIBER series paper. We would like to thank Odilon Camara, Enlinson Carvalho, Tiago Cavalcanti, Gabriel Montes Rojas and Peri Silva for many helpful comments. Of course, only we are responsible for the final product.
Manuscript Received : 2005
Manuscript Published : 2005
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