ECLAC Report Links Latin American Tax And Wealth Gaps

by Mike Godfrey, Tax-News.com, Washington

19 August 2015

The Economic Commission for Latin America and the Caribbean said in a new report that Latin American states should look to tax policy to promote greater equality and support poverty reduction efforts.

In the study, entitled The redistributive potential of taxation in Latin America, experts from ECLAC assessed the impact that income tax and public cash transfers have on wealth distribution across 17 Latin American countries.

The study found that public cash transfers account for, on average, 61 percent of the reduction in the Gini coefficient – a measure of income inequality – in Latin American countries. The remainder is due to income tax and social security contributions.

It also said that increasing the income tax rate on the top income bracket by up to 20 percent would considerably increase income distribution and promote greater income equality in Latin American states.

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