Yes and no. Informal work is generally done by poorer folks. While they should be paying taxes, the Brazilian income tax system penalizes low income earners the most. It’s not a progressive tax system like you find in Europe or the US. When you go to the next tax “band”, it’s not just the excess income that gets taxed at the new band. it’s all of your income.
For example, say there’s no income tax on incomes below 30k a year, and the first tax bracket is 20%. The moment your earnings go to 31k you’ll net less money than someone making 30k because the 20% is applied to all 31k.
This obviously has a pretty negative effect on low income families.
I still remember the surprise when I got my first salary raise and it bumped me from the 20% bracket to the 27.5% bracket and realized I was making less money.
As far as I remember (I used to be Brazilian) the tax is applied to the difference, so 20% is discounted from the maximum for the 20% bracket, and 27.5% (and, boy, I wish I only paid 27.5% tax here) is applied to the difference.
Or am I misremembering? Maybe it's taken from the payslip, but returned with the yearly adjustment (which could make sense)
> And yeah, I also miss 27.5% tax. Ireland’s 52% marginal tax rate makes me sad every time.
OTOH, we don't have to walk through someone's living room when going to work, or buy candy from kids on traffic lights.
Equality has a price I'm more than happy to pay. I still remember how rare a sight kids selling candy on traffic lights was in the mid 2000's and it crushes my soul to see that again when I visit my family down there.
It was always progressive. A lot of people think it isn't and I have no idea where that came from. You probably misinterpreted your _holerites_ back then.
It is only in the difference between the brackets, technically you should never make less money by going into a higher bracket, just less then you expected.
Brazilian here: you are probably misremembering it, or there was some other kind of deduction happening in your payslip.
And I say this with confidence, because Brazilian tax brackets work progressively, and have worked like that since always, just like every other sane country out there.
