Secretary of State Hilary Clinton just gave a speech in which she said: The rich are not paying their fair share in any nation that is facing the kind of employment issues (the United States is), whether it’s individual, corporate, whatever the taxation forms are. Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — it’s growing like crazy. And the rich are getting richer, but they’re pulling people out of poverty … There is a certain formula there that used to work for us until we abandoned it, to our regret in my opinion.

Brazil’s income tax rates are presented below. As you can see they are lower than that of the US, Canada, and all of the countries in Western Europe. Corporate taxes are also lower in Brazil than in the US. Brazil does have a VAT which averages 17%.

Thus, Brazil has a tax regime which places a greater burden on the average worker than it does on the rich. If they are pulling themselves out of poverty, as the Secretary says, they are doing so with a low maximal income tax rate which is not what she implies. If we take her at her word Brazil should raise their maximal income tax rate. If the rich are getting richer in Brazil it might be because they are taxed less than in the US. Furthermore, if Brazil’s economy continues to grow its tax to GDP ratio will rapidly fall unless taxes are raised. But there’d be no reason to raise taxes with a rapidly growing economy which is benefiting all the people of the country.

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