The authors examine the contribution of public transfers and direct taxes to income inequality in Brazil. We apply a factor decomposition of the Gini to the POF 2008-9 data to measure the contribution to inequality of direct taxation, wages of public and private sector workers, cash transfers, pensions and other incomes. State payments worsen income inequality but not all State actions are regressive. Wages and pensions for current and retired public sector workers have profound inequality-generating effects, whereas direct taxation and welfare transfers are pro-poor, although their positive influence is limited. The net contribution of all direct monetary flows between the State and individuals is regressive and contributes to approximately one third of the inequality in per capita net income.
Social stratification; Income inequality; Taxation; Public sector workers; Pensions
