Is%20there%20an%20anti%2Dlabor%20bias%20in%20Latin%20American%20tax%20policies%3F

Policy Brief

Is there an anti-labor bias in Latin American tax policies?


CODE: IDB-PB-177
AUTHOR(s): Fajardo, Deisy Johanna , Lora, Eduardo
PUBLISHED: October 2012
LANGUAGE: Spanish
RELATED TOPICS: Finance
DOWNLOAD FILE IN: Spanish

Abstract:

Payroll taxes along with minimum wages have derived in a remarkable increase in labor costs in Latin America since the nineties. Given that, simultaneously, corporate taxation rates have dropped, this study analyzes the probability of a resulting anti-labor taxing bias in Latin American countries. An accounting approach is used which allows calculating the effective rates of taxation for both work and capital and then comparing them. As in developed countries, tax burdens in Latin America are biased against labor income in the sense that the effective rates on labor taxes (both direct and payroll) are greater than the effective rates on capital taxes. Among the countries analyzed in the study, Venezuela, Guatemala, Colombia and Brazil display the greatest anti-labor biases.

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