Brazil’s Super Rich Own 45% of GDP

Roughly 700 people–that is, 0.36% of the Brazilian population–own 45% of Brazil’s GDP. And they almost always pay less tax than the average worker. A new study, conducted by economist Evilasio Salvador, shows how Brazil has one of the most unequal tax systems in the world.

For his research, Salvador used data from people’s income tax declarations from 2008 to 2014. It shows how the distortions of the Brazilian tax system further increase economic inequality, Plus55 reported.

According to the Brazilian tax legislation, profits are not taxable. Sources of income other than salaries are also taxed with much lower rates. It creates a bizarre reality in which the 71,440 “super rich” practically don’t pay taxes. Almost 65% of their income is from non-taxable sources.

For decades, politicians from all major parties talk about a tax reform as a glaring need of the country. However, nothing has been done so far to reform a system that magnifies–instead of reducing–the profound inequality in Brazil. A tax for the super rich, for example, is never seriously debated.

While Brazil experiences its worst recession in a century, the number of millionaires has grown to 172,000. Billionaires also saw their fortunes grow by 12.3% over the last year. Meanwhile, the number of people in extreme poverty has grown from 5.4% of the population to 5.9%.

Despite gains for the wealthy Brazilians, Latin America’s largest economy faces serious difficulties. Unemployment hit a record low in 2016. Average income tripled between 2001 to 2011, exploding from $8,000 to $27,100 in a mere decade. However, this year recorded a 30% fall in average income back to $21,000. Meanwhile, 24 million Brazilians still earn less than $249 in a year.