Progressivity and distributive impacts of personal income tax: the case of China and Brazil

Vol. 42 No. 4 (2022)

Oct-Dez / 2022
Published December 21, 2022
PDF-English
PDF-English

How to Cite

Rossi, Pedro, Ricardo Gonçalves, and Ping Shang. 2022. “Progressivity and Distributive Impacts of Personal Income Tax: The Case of China and Brazil”. Brazilian Journal of Political Economy 42 (4):998-1013. https://doi.org/10.1590/0101-31572022-3323.

Progressivity and distributive impacts of personal income tax: the case of China and Brazil

Pedro Rossi
Professor Universidade de Campinas – Unicamp, Campinas-SP, Brasil.
Ricardo Gonçalves
PhD student at Universidade de Campinas – Unicamp, Campinas-SP, Brasil.
Ping Shang
Corresponding Author, Professor at Fudan University, Shanghai, China.
Brazilian Journal of Political Economy, Vol. 42 No. 4 (2022), Oct-Dez / 2022, Pages 998-1013

Abstract

This paper aims to evaluate and compare the distributive impact of the personal
income tax (PIT) on individual’s income in Brazil and China by measuring the Gini Index
before and after this tax incidence. The paper also proposes a methodology for transposing
the PIT backets from one country to another. The results show that a more progressive
scheme implemented by China, with more brackets and higher rates, does not guarantee
reduction of inequality, due to the level of income exemption and to the incomes on which
the marginal rates affect. Thus, it can be perceived that the PIT brackets of these two
countries deserves revisions if they seek to fulfill the distributive function.

JEL Classification: E62; H24; N45; N46.


Keywords: Gini index income distribution personal income tax tax progressivity