Super Rica has paid less income taxes than the middle class since 2009, reveals an unprecedented study

Super Rica has paid less income taxes than the middle class since 2009, reveals an unprecedented study


The taxation of the millionaires has withdrawn almost 40% since 2007; House should vote for Wednesday’s proposal to lift to move from the top of the pyramid.

The Brazilian super rich, collaborators with millionaire earnings, pay less than half of the income on the middle class income, shows an unprecedented survey by the National SinDifisco, a union that represents the auditors of federal revenues.

The detailed data for BBC News Brasil reveal that the taxation of the richest taxpayers has a decline in the last two decades, withdrawing almost 40% between 2007 and 2023, due to greater earnings with dividends – profits distributed by companies to shareholders who have not been taxed in the country since 1996.

On the other hand, the Brazilians of intermediate profit are paying more and more imposed due to the freezing of the IR table, which has been obsolete in relation to inflation.

With this, since 2009, the Brazilian Brazilian millionaires, with monthly earnings above 320 minimum wages, have paid proportionally less than the middle class – and the difference between the two groups has increased over the years (better understand the numbers compared to the relationship).

The government of Luiz Inacio Lula da Silva (PT) is trying to change this reality with a tax reform on income that was devoted to the Chamber of Representatives Wednesday (1/10). The proposal is to create a minimum tax up to 10% for high -income Brazilians, while increasing the IR exemption limit for a monthly income up to $ 5,000.

If the proposal is approved, the Brazilian Brazilian Brazilians will pay a level similar to the income on the income of the middle class (a group that is not influenced by Lula’s proposal), while the Brazilians with earnings lower than $ 5,000 will stop contributing.


How rich it started paying less than the middle class




The SinDifisco survey shows that the taxation of the middle class has no increase since 2010.

From the data available from the IRS, the union of the tax auditors could calculate the actual tax rate paid for each income interval from 2007 to 2023.

The actual rate is the percentage of total income which is actually consumed by IR. For example, if a person earned $ 200,000 in a year (about $ 16,000 per month) and paid $ 20,000 in income tax in the same period, its average rate was 10%.

Already if a taxpayer earned $ 6 million in a year and paid $ 300,000 IR, his actual rate was 5%. That is, although this person has contributed to the IRS with an absolute greater value than the lower income taxpayers, he has lost a smaller part of his earnings.

The syndifisco survey shows that the contributors with earnings greater than 320 minimum wages per month by 2023 – the equivalent of $ 5,068 million total income that year – paid an average of an effective rate of 4.34%.

It is less than half of what they paid for those who have monthly earnings between 5 and 30 minimum wages (an annual income between 79.2 thousand and R $ 475.2 thousand in 2023), which were taxed, on average of 9.85% in the same year.

The historical data calculated by SinDifisco show that the situation was different in 2007, when the two groups had effective rates nearby and the richest paid a little more.

That year, taxpayers with monthly earnings of over 320 minimum wages paid on average 6.9%. And the group with a monthly income between 5 and 30 minimum wages had an average actual rate of 6.3%.

The minimum salary in 2007 was $ 380, that is, an income of 320 minimum wages meant an annual profit of $ 1.459 million at that moment. Updated by inflation, it would be the equivalent of almost $ 4 million today.

Already an income of 5 to 30 minimum wages from 2007 is equivalent in these days, already updated by inflation, to an annual profit of approximately $ 61 thousand at 370 thousand.


According to SinDifisco, what explains the withdrawal of the actual rate paid by the millionaires in recent years is the increase in their non -tax share, mainly due to the greater earnings with dividends – part of the profits that companies distribute to their shareholders.

That is, part of the surface income is free from IR and this type of gain has grown.

According to the tax auditor Dão Real, president of National Sindifisco, the increase in dividends’ earnings is a process that was already taking place before, but recently intensified, after the Covid-19 pandemic.

He says that the correlation of this process with pandemic is not yet clear, but the data show that during this period, the profits of the companies have grown more than other income.

“There is a very significant growth. When we compared the year 2020 with 2023, we see that the income of profits and dividends grew by 43% and total rents grew by 31%. So the exempt income increases more than the normal growth of total rents,” he says.

On the other hand, he observes, the fact that the income tax table was without being updated for inflation for many years explains the increase in the actual rate for medium and low income groups.

Since wages often have a little annual raising to compensate for inflation, workers end up climbing a range of contributions and paying more IR, even if their purchasing power is not necessarily increased.

Since 2009, the Brazilian table has five lanes. After the exempt track, the rate gradually is 7.5% to 27.5%.

The highest commission focuses on monthly earnings plus R $ 4,664.68 – This value has been the same since 2015, for example.

“The freezing of the table pays every year of taxable income every year,” says Dão Real.

“However, when we put the total rents, we see that the actual rate, which should always increase in a freezing on the table, is falling to the high income. And this reduction for a high income is due to the increase in exempt income,” he said.

Understand the proposal of the Lula government



Lula sent his proposal to move from IR to March to the congress

In the law, the current exemption limit for all Brazilians is R $ 2,259 and, in previous earnings, progressive rates are charged to 27.5%.

With the “simplified discount” mechanism adopted by the Lula Administration since 2023, in practice, the exemption has benefited from those who earn up to two minimum wages (R $ 3,036).

The proposal sent by the president to the congress in March is to expand the exemption of IR to an income up to $ 5,000.

The reform also plans to reduce the taxation of those who earn between $ 5,000 and $ 7 thousand – this limit later was expanded to $ 7,350 by the Special Commission of the Chamber which approved the bill sent by the Government, before the vote in the plenary of the Chamber.

To compensate for the loss of collection with these changes, the reform establishes a minimum tax up to 10% for taxpayers with earnings from $ 50,000 per month ($ 600,000 per year).

The government’s proposal is that the rate will gradually increase from zero to 10%, so that the maximum level focuses only on taxpayers with earnings greater than $ 1.2 million per year.

The syndifisco survey indicates, for example, that people with income between 80 and 320 minimum wages by 2023 (from $ 1.267 million to $ 5,068 million in that year) paid an average tax rate effective by 6.11%.

If the government’s proposal is approved in the Chamber and the Senate, these people will pay at least 10%.

It will work: the taxpayer with annual income from 1.2 million r $ who paid less than the minimum level, will have to pay the difference until the rate of 10%, in the annual irreplaceing.

If by chance, the person has already contributed with over 10% of their income, it will have no additional cost.

For the president of the SinDifisco, the government reform “partially resolves” the distortions of taxation of income in Brazil.

According to him, the ideal was that the effective rates were progressive, that is, the greater the income, the greater the IR. With the government’s proposal, however, the middle class will still pay a rate similar to that of the rich.

On the other hand, it underlines that the proposal will interrupt the IR increase compared to low -income taxpayers, an increase also caused by the freezing of the table.

According to the SinDifisco survey, the average tax rate of the declarants with an income of up to 5 minimum wages was 2.66% in 2023, about 12 times more than 2007 (0.22%).

If the exemption for rent up to R $ 5,000 is approved and a lower taxation for income up to 7,350, the average rate paid by those who earn up to 5 minimum wages (currently R $ 7,590) will have a strong reduction.

“That is, the government’s proposal, will confuse with both extremes: it overturns the actual tax rate of those who earn up to five minimum wages and will go up to the richest”, says Dão Real.

SinDifisco claims that the change could be even greater, with the correction of the IR table for past inflation, reducing the charge on the middle class.

The Union presented a proposal to Congress in which the minimum tax on the richest would have a higher rate of up to 15%, which would cover the exemption of the intermediate income.

The government, however, must already face the resistance to create the minimum tax of 10%, which indicates that it is difficult, at the moment, to approve an even greater tax rate on the super rich.

Source: Terra

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