Comparative Study of the update of the table of incidence of Individual Income Tax (IIT) relating to IPCA (Extended National Consumer Price Index) accumulated from 1996 to 2014

Abstract

Since the Individual Income Tax (IIT) was institutionalized, it has played an important role in affecting the reduction of social inequalities, whereas it also directly affects the net income of individuals. For this reason, the objective of this study is to verify whether the update of the table of incidence of IIT is equivalent to the accumulated inflation in the period of 1996 to 2014, in order to confirm if IIT is accomplishing its function of social difference reduction. Data from IBGE (The Brazilian Institute of Geography and Statistics) were used as the IPCA of years included in the study and contrasted with the effective upgrading occurred in the table of incidence of IIT. Due to the diversity of deductions used for each contributor, an adjustment statement without flipping deductions or dependents was used. The tables used to calculate the study were provided in this article. This study concluded that the tables of incidence of IIT is out of phase with the IPCA accumulated, a fact which in practice results in two immediate factors: higher number of contributors classified into the tax bracket, that is, above the exemption values and higher rates for people with incomes higher than the exemption limit due to change of tax bracket. Another important fact found is that citizens with lower incomes were the most affected by the upgrading discrepancy, thereby harming the principle of social equality of IIT.