Professional Politicians and the Quiet Dilution of Brazil’s Tax Reform: the Case of Offshores and Super-Rich Investment Funds

Raquel Pimenta and Iana Lima (Fundação Getúlio Vargas)

Brazil’s 2023–24 initiative to tax offshore structures and “exclusive” investment funds is heralded as a rare progressive step in one of the most regressive tax systems in the Global South. This paper traces how the redistributive ambition of the executive’s proposal was steadily weakened during its passage through Congress. We analyzed 384 legislative amendments and compiled socio-professional profiles for all 82 legislators who sponsored them. Each amendment is coded by its distributive orientation (pro-wealth, pro-distribution, technical, or other) and by the legal mechanism it employs—rate cuts, deferral rules, or procedural rules. We found that legal strategies for preserving wealth focused on three main approaches: targeting the tax rate directly, using more indirect measures (including timing and basis), and targeting sectoral benefits. Linking these data to legislators’ backgrounds reveals that career politicians with limited non-political work experience authored 78 percent of the successful pro-wealth changes, far outpacing business owners and other profiles. By combining document analysis, prosopography, and discourse network analysis, the study demonstrates that the social composition of lawmakers is a critical, yet under-explored, factor in fiscal policymaking. It also expands the understanding of the legal repertoire of wealth preservation by analyzing legislative activities and profiles through their discursive patterns. The findings contribute to broader debates on the political economy of taxation in Latin America, highlighting the importance of who acts and how they craft tax law.

Wealth and income inequality have been rising since the nineteen eighties. Though technology and globalisation are major drivers, financial deregulation, tax cuts in income and capital gains are no less responsible for this rise. What is the role of the men and women who set the rules of the game and the tax rates? Does their personal wealth and private, professional career bias tax policies, above and beyond the government’s policy agenda? Using new biographical data on finance ministers in 50 democracies across continents and over 15 years, this project looks at the relationship between finance ministers’ career interests and wealth on the one hand and tax reforms on the other. We created a novel dataset that includes prime ministers, finance ministers, foreign affairs ministers, and defence ministers from 50 democracies between 2005 and 2020. For each minister in our dataset, we record their gender, age, place of birth, education (including the educational categories of any degrees attained), prior professional experience (including their first job after school and last job before entering politics), post-professional experience, non-occupational experience (including their experience in trade unions, voluntary sector, and other interest groups), various political career variables, and several wealth-related variables, such as side jobs, share ownership, real estate, debts and liabilities, gifts, trusts, corporate interests, savings, and informal ties. We further expand our dataset by coding whether ministers held board memberships at any point in their careers, relying on publicly available information and Boardex. We make several contributions to the literature on the revolving door and the role of individual politicians on policy. We work with two types of biographical information that allow us to distinguish ministers’ incentives between socialisation and social class, on the one hand and future wealth, on the other. Socialisation is captured by ministers’ past professional experience, with those coming from the finance and banking sector being typically more in favour of lower capital taxation than those coming from other high-income professions such as law or consultancy. To capture politicians' future income and, in turn, their preference for lower taxation either for purely personal reasons or as a signal to future employers, we code ministers’ positions in corporate boards. As far as we know, we are the first to directly test the impact of 'worldview or social class' as opposed to 'future income' on tax policy. We also contribute to the literature on tax policy reform by examining the role of individual policymakers on a range of taxes, namely income, corporate tax and capital gains tax. To our knowledge, we are the first to examine the role of government and politicians’ ideology in capital gains tax in a large-scale study, as these data are difficult to collect. Using a number of dependent variables (top marginal income, corporate and capital gains tax) and independent variables (ministers’ past profession and board memberships) we test a number of distinct hypotheses on the role of politicians on taxation. We expect those coming and going to the high-paying corporate and financial sector are more likely to be biased towards lower top income, capital and corporate taxes, as opposed to average income tax. Those who find themselves in the boards of large financial or corporate firms should also be associated with cuts in corporate and capital gains tax and perhaps less so on income tax, independently of their past professional career.

Do their Interests Matter? Finance Ministers and Tax Reform in Democracies

Despina Alexiadou and Giulia Venturini (University of Strathclyde), Miquel Pellicer and Eva Wegner (University of Marburg)

Lukas Rädle (University of Marburg)

While policy outcomes consistently align with the preferences of the affluent, the politicians responsible for crafting these policies remain understudied actors in the policy process. This research examines how political elites in key positions influence redistributive policy outcomes that favor the wealthy and investigates whether politicians' agency correlates with their socio-economic backgrounds and financial interests. Using a large-scale media analysis of key political actors involved in inheritance tax reform legislation, this study explores their policy goals and achievements, addressing a critical gap in understanding how those with direct power over policy formation conceptualize their influence on reforms that systematically advantage the wealthy. The findings will contribute to scholarship on political behavior, elite decision-making, and the relationship between politicians' personal characteristics and their policy preferences while offering insights into the mechanisms through which regressive tax policies are formulated.

Inside Wealth Policy: Politicians, Perceptions and Interests

Lukas Rädle (University of Marburg)

Despite growing inequality, tax policies continue to favor the wealthy, yet research on how politicians justify these outcomes through "deservingness" frames remains limited. This study examines German inheritance tax reforms (2008, 2016) by analyzing parliamentary debates in the Bundestag using Van Oorschot's CARIN and Schneider and Ingram's policy target group framework. The research investigates how political actors strategically frame the affluent as deserving beneficiaries of favorable tax policies, exploring the rhetorical strategies used to legitimize redistributive outcomes that favor the wealthy. Through qualitative content analysis of parliamentary speeches from five selected debates, this study examines how notions of deservingness are constructed and deployed to justify tax policies benefiting the rich. By comparing these constructions with existing frameworks surrounding low-income or marginalized groups, this research addresses a critical gap in understanding how deservingness narratives are selectively applied in political discourse. The study contributes to scholarship on social policy, inequality, and political framing by analyzing the distinct ways politicians portray wealthy beneficiaries as deserving of favorable treatment, offering insights into how regressive policy outcomes are legitimized during periods of increasing economic inequality.

Deserving a Tax Cut? How German Politicians Justify Policies Benefiting the Wealthy

Agent-based Models to Simulate Wealth Accumulation: Notes on the Development Process and Possible Applications

Jana, A., Keshav, A. V., and Ranchhod, V. (University of Cape Town)

This paper presents a set of agent-based models (ABMs) that simulate wealth accumulation in a hypothetical society over time. By simulating interactions between individual agents over time, ABMs can reveal emergent, macro-level distribution patterns that mirror real-world outcomes. A key contribution of this approach is its capacity to analyse the temporal dimensions of policy impact, or the ‘half-life of policies,’ to understand how long interventions might take to meaningfully reduce wealth concentration. The study aims to provide a robust framework for assessing the long-term efficacy of various policy scenarios. The paper then uses the South African wealth distribution as an illustrative example to exhibit how different forms of tax regimes can effect changes in the concentration of wealth at the top of the distribution.

How Do Personal Assets Condition Parliamentary Behavior? Shares, Real Estate, and Parliamentary Questions in South Africa

Letícia Barbabela, Eva Wegner, Miquel Pellicer (University of Marburg), Despina Alexiadou, Giulia Venturini (University of Strathclyde)

This paper investigates how legislators’ personal assets shape their parliamentary behavior, focusing on the use of parliamentary questions (PQs) as a potential tool for self-interested information gathering. While prior research has established links between politicians’ socioeconomic backgrounds and policy preferences, the specific influence of asset ownership on legislative oversight remains relatively understudied. Using data from South Africa—including MPs’ asset declarations, occupational background, committee memberships, and PQs across three legislative terms—we analyze whether those holding property (real estate) or financial assets (company shares) are more likely to address questions to economically relevant ministries. Our analysis reveals a positive association between financial assets and PQs targeting ministries tied to MPs’ economic interests, with this pattern varying by asset type and sector. No significant link is found for property ownership, while financial assets—particularly those tied to specific sectors—correlate with more targeted oversight activity. Notably, MPs with infrastructure-related shares are more likely to question relevant ministries, whereas no such pattern emerges in relation to extractive industries. These findings highlight PQs as an underexplored yet revealing mechanism for tracing self-interested financial behavior in legislatures. By distinguishing between direct financial interests and other drivers of PQ activity, the study contributes to debates on unequal representation, conflicts of interest, and legislative behavior, particularly in contexts beyond affluent democracies.

This article investigates whether there exists a pro-wealth bias in the policy-making processes. To this end, it examines both tax policy proposals and outcomes. We analyze whether tax-related promises made in electoral manifestos by parties coming to power, on the one hand, and the taxes implemented by the same parties while in office, on the other hand, exhibit a bias towards better-off citizens. We draw on the unequal responsiveness literature, which finds that policies tend to be more consistent with the preferences of better-off citizens than worse-off citizens. Our analysis interrogates if such bias appears in the post-electoral process: in between the party promises that citizens vote on, and the final implementation of the policies. This study examines tax policies for several decades in the cases of the United Kingdom, Germany, Brazil, and South Africa. For this purpose, we have created a novel cross-country database by coding parties’ tax promises and outcomes using data from the Party Manifesto Project and official documents (e.g., Finance Acts, Budget Reviews, Treasury Records, etc.). We investigate if pro-wealthy tax promises are more likely to be implemented, and if pro-wealthy tax measures actually implemented are less likely to have appeared previously in the party programs. Our research also addresses continuities and discontinuities in tax policy making across time and space (in terms of the “Varieties of Capitalism” literature).

Pro-Wealth Bias in Tax Policies: Promises and Outcomes

Ibrahim Kuran, Miquel Pellicer, Eva Wegner (University of Marburg)