Taxation and income: a study regarding the regressive model of indirect taxation in Brazil

Abstract

Purpose: To verify if indirect taxes on the income of taxpayers actually tend to be regressive, increasing the disparity between Brazilian taxpayers.
 Methodology: The empirical strategy consisted in estimating a simple linear regression model, based on the model developed by Pintos-Payeras (2008). The database was based on the data from the family budget survey (POF / 2002-2003).
 Results: The results show that indirect taxation tends to be regressive when family income is taken as the basis, since it affects all without distinguishing between its taxable capacity.
 Contributions of the Study: The study demonstrates that those who are in better economic conditions have less and less to bear with this tax burden, and, therefore, taxes are more heavily burdened on people with lower purchasing power.