Taxing wealth: general principles, international perspectives and lessons for Brazil

MORGAN, MARC; CARVALHO JUNIOR, PEDRO

doi:10.1590/0101-31572021-3131

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Brazilian Journal of Political Economy

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Articles • Brazil. J. Polit. Econ. 41 (1) • Jan-Mar 2021 • https://doi.org/10.1590/0101-31572021-3131 copy

Taxing wealth: general principles, international perspectives and lessons for Brazil

Tributação da riqueza: princípios gerais, perspectivas internacionais e lições para o Brasil

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

The international debate on wealth taxation has been subject to renewed interest amid new proposals coming out of the US electoral cycle and the salience of wealth inequality. This article reviews the case for taxing wealth and its transfer across generations (wealth and inheritance taxes), analyzing their design from an international comparative perspective, and extracting lessons for Brazil. The long-debated “Tax on Large Fortunes” has never been implemented and the state-level “Tax on Inheritances” has been watered down over time. We propose a framework for the progressive implementation and reform of both taxes in the country. We argue, given the historical record and current research, that they are technically and administratively feasible propositions, notwithstanding important political economy considerations.

KEYWORDS:
Wealth tax; inheritance tax; inequality

Country	Competence	Tax Base	Tax Unit	Tax Threshold¹	Tax Rates (%)
Luxembourg	Central	Net Wealth	Corporate	No threshold	0.5
Switzerland	Regional and Local	Net Wealth	Personal	180,000²	0.1 to 0.94
Uruguay	Central	Net Wealth	Personal and Corporate	120,000	0.7 to 2.8
Colombia	Central	Net Wealth	Personal	1,300,000	1.0
Norway	Regional and Local	Net Wealth	Personal	120,000	0.85
Argentina	Central	Gross Wealth	Personal	70,000	0.25 to 0.75
France	Central	Net Real Estate Value	Personal	1,300,000	0.5 to 1.5
Spain	Central and Regional	Net Wealth	Personal	700,000	0.5 to 2.5

Country	2000-2003*	2004-2007*	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Luxemburg	2.37	2.26	1.90	1.94	2.07	1.99	2.04	2.10	2.16	2.52	2.62	2.73	2.87
Switzerland	1.20	1.20	1.19	1.20	1.17	1.13	1.12	1.17	1.21	1.24	1.26	1.28	1.33
Uruguay	0.75	1.01	1.05	1.18	1.08	1.06	1.06	1.06	1.14	1.11	1.05	1.01	0.98
Colombia	0.48	0.18	0.69	0.44	0.41	0.72	0.66	0.63	0.58	0.69	0.51	0.42	0.05
Norway	0.53	0.55	0.56	0.56	0.55	0.55	0.55	0.56	0.57	0.45	0.54	0.54	0.57
Argentina	n.d.	0.30	0.29	0.32	0.31	0.27	0.27	0.31	0.31	0.31	0.24	0.22	0.10
France	0.16	0.19	0.21	0.18	0.22	0.21	0.24	0.21	0.24	0.24	0.22	0.22	0.08
Spain	0.20	0.20	0.26	0.06	0.06	0.06	0.14	0.20	0.18	0.18	0.18	0.18	0.18
Iceland	0.70	0.10	-	-	0.24	0.37	0.53	0.47	0.54	-	-	-	-

Country	Direct Descendants			Others Heirs
Country	Exemption Threshold¹	Top Marginal Threshold¹	Top Marginal Tax Rate	Top Marginal Tax Rate
Japan	75,000	4,500,000	55%	55%
Korea	75,000	2,300,000	50%	50%
France	160,000	1,800,000	45%	60%
United States	5,000,000	5,000,000	40%	40%
United Kingdom	368,000	368,000	36%	36%
Ireland	310,000	310,000	33%	33%
Spain	8,000	800,000	32%	64%
Belgium	50,000	500,000	30%	80%
Germany	400,000	26,000,000	30%	50%
South Africa	235,000	2,100,000	25%	25%
Chile	56,000	840,000	25%	35%
Holland	20,000	122,000	20%	40%
Finland	20,000	1,000,000	19%	33%
Ecuador	50,000	600,000	17.5%	35%
Argentina (BA)²	10,000	670,000	16%	22%
Denmark	34,000	34,000	15%	25%
Iceland	10,000	10,000	10%	10%
Greece	150,000	300,000	10%	40%
Turkey	37,000	926,000	10%	10%
Taiwan	12,000	12,000	10%	10%
Colombia	Integrated to Income Tax	n.a.	10%	10%
Brazil	20,000	n.a.	8%	8%
Italy	1,000,000	1,000,000	4%	8%

Country	1995-2000	2001-2005	2006-2010	2011	2012	2013	2014	2015	2016	2017	2018
Belgium	0.37	0.48	0.61	0.64	0.70	0.79	0.70	0.73	0.70	0.72	0.72
France	0.42	0.47	0.41	0.41	0.43	0.45	0.48	0.56	0.55	0.62	0.61
Japan	0.43	0.30	0.29	0.31	0.32	0.33	0.39	0.39	0.40	0.39	0.41
Korea	n.a.	n.a.	0.24	0.25	0.37	0.32	0.35	0.30	0.33	0.39	0.41
Taiwan	n.a.	n.a.	n.a.	0.17	0.19	0.16	0.16	0.20	0.28	0.29	n.d.
Holland	0.28	0.30	0.29	0.24	0.21	0.27	0.23	0.24	0.26	0.25	0.25
United Kingdom	0.18	0.21	0.20	0.18	0.18	0.19	0.21	0.24	0.25	0.26	0.22
Finland	0.23	0.29	0.27	0.20	0.25	0.32	0.24	0.30	0.24	0.41	0.30
Spain	0.20	0.22	0.25	0.21	0.22	0.24	0.26	0.26	0.24	0.23	0.22
Germany	0.12	0.16	0.17	0.16	0.16	0.16	0.19	0.21	0.22	0.19	0.20
Denmark	0.20	0.20	0.22	0.26	0.21	0.21	0.20	0.26	0.21	0.20	0.21
Switzerland	0.28	0.22	0.15	0.14	0.14	0.15	0.18	0.16	0.17	0.17	0.18
Ireland	0.18	0.13	0.17	0.14	0.16	0.15	0.19	0.16	0.15	0.15	0.16
Iceland	0.10	0.09	0.11	0.08	0.11	0.13	0.13	0.13	0.15	0.16	0.15
United States	0.32	0.27	0.20	0.09	0.12	0.16	0.14	0.14	0.14	0.14	0.14
Brazil	n.a.	0.04	0.05	0.06	0.07	0.08	0.08	0.11	0.12	0.11	0.11
Greece	0.25	0.17	0.08	0.06	0.05	0.05	0.06	0.08	0.07	0.09	n.d.
Chile	0.03	0.04	0.07	0.04	0.05	0.03	0.02	0.05	0.06	0.11	0.07
South Africa	0.04	0.04	0.03	0.04	0.03	0.03	0.04	0.05	0.04	0.07	n.d.
Italy	0.07	0.03	0.02	0.11	0.04	0.04	0.04	0.04	0.04	0.05	0.05
Turkey	n.a.	n.a.	0.09	0.02	0.02	0.02	0.02	0.02	0.02	0.02	0.03
Norway	0.09	0.09	0.09	0.06	0.06	0.07	0.06	-	-	-	-
Austria	0.05	0.07	0.04	-	-	-	-	-	-	-	-
Sweden	0.10	0.09	-	-	-	-	-	-	-	-	-
Portugal	0.07	0.05	-	-	-	-	-	-	-	-	-

Accumulated wealth (as multiples of monthly min. wage)	Effective tax rate
20,000	0%
50,000	2%
250,000	3%
1,000,000	4%

Accumulated capital receipts (as multiples of monthly min. wage)	Effective tax rate
50	0%
100	20%
250	25%
500	30%
1,000	35%
2,000	40%
10,000	45%
25,000	50%

Centro de Economia Política Rua Araripina, 106, CEP 05603-030 São Paulo - SP, Tel. (55 11) 3816-6053 - São Paulo - SP - Brazil
E-mail: cecilia.heise@bjpe.org.br

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[1] **
Doctor in Economics, Paris School of Economics.