This article examines the divergent paths of Argentina and Brazil in terms of the capacity to tax and the capacity to enact tax reforms. The article seeks to explain why the tax share is much higher in Brazil and why this country was also better equipped to implement reforms in the post authoritarian period. The author reviews rival explanations and concludes that the factors that explain a great deal of the divergence under investigation are political instability and the federalist institutional arrangements. Instability is closely associated with federalism (and also by some preference polarization by both) and plays a crucial role in understanding tradeoffs faced by governments in order to privilege a certain instrument of resources collection from society.
Taxation; Fiscal federalism; Tax reform; Brazil; Argentina
