Simulating Brazils tax-benefit system using Brahms, the Brazilian household microsimulation model

Abstract

Despite raising an amount of taxes that represents nearly 37% of the countrys GDP and spending over half of this revenue on social programmes, the Brazilian government has not been able to significantly alleviate inequality and poverty. A number of studies have shown evidence that, to a great extent, this situation is due to the inadequate targeting of public expenditures. The distributive impact of the financing of these expenditures, however, has received less attention. This paper investigates the combined impact of taxes and government cash transfers on the distribution of income among Brazilian households and compares Brazils redistributive performance with that of some countries with a similar tax burden.