Structural Tax Reforms: French Experience and Implications for the Brazilian System

Ana Karollina Benedetti Bettoni; Josély Lopes Fialho

DOI: 10.22167/2675-6528-202602646

Article derived from a Course Conclusion Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by Instituto Pecege for textual synthesis and organization.

Summary

The taxation of high-value assets is an instrument for promoting fiscal justice, the structuring of which requires a coherent normative and institutional arrangement. The study assessed the contribution of high-value taxation to more equitable economic development and analyzed whether mechanisms for taxing large fortunes or high-value assets constitute a legally viable and economically effective path to fiscal and social justice in Brazil. The research adopted a qualitative, theoretical-descriptive, and analytical-comparative approach, focusing on Brazil and France, using bibliographical, documentary, and macroeconomic and microeconomic indicators. It was observed that the French experience with taxes on large fortunes, such as the ISF and IFI, did not cause major shifts in aggregate macroeconomic indicators, but revealed redistributive potential when supported by robust administrative capacity and international cooperation. In the Brazilian context, the low effective intensity of wealth taxation contributed to the maintenance of wealth concentration. It was concluded that the effectiveness of high-value taxation for fiscal justice depends not only on the creation of new taxes, but on strengthening progressivity, tax administration, adequate measurement of the taxable base, enforcement efficiency, and international cooperation, essential elements for consolidating the Brazilian tax system on more equitable grounds.

Keywords: Fiscal justice; Tax progressivity; Structural tax reform; Taxation of high-value goods; Taxation of large fortunes.

1. Introduction

The Constitution of the Federative Republic of Brazil of 1988, known as the “Citizen Constitution,” was founded on the principles of ability to pay and fiscal justice. It established the Union’s competence to institute the Tax on Large Fortunes (IGF) and enshrined a progressive taxation model, guided by social solidarity. In Carrazza’s (2018) understanding, progressivity corresponds to the gradual increase in tax rates as the taxable base increases, allowing the tax burden to be distributed more intensely among those who hold greater economic capacity. These values, which emerged with the French Revolution at the end of the 18th century, exerted a lasting influence on the formation of contemporary constitutionalism.

Faced with growing criticism of capital concentration, the debate surrounding high-value taxation gains renewed relevance. For the purposes of this work, a distinction is proposed between “high-value taxation” as the genus, that is, the broad normative guideline, oriented towards the incidence on economically relevant manifestations of wealth, founded on the principles of ability to pay and progressivity. “Taxation of high-value assets” is considered the species, representing the technique of selective incidence on individualized assets whose high value evidences greater contributory aptitude of the passive subject, or the technique of general incidence on wealth (Torres, 2016). This distinction is instrumental for the comparison between the French and Brazilian models developed in this study.

Internationally, a significant milestone was the presentation, within the Group of Twenty (G20) in 2024, of a proposal for the establishment of a global minimum tax for individuals with high net worth, known as High Net Worth Individuals (HNWIs). The commitment to cooperation was formalized in the Leaders’ Declaration, identified as a potential mechanism to mitigate the rapid or massive evasion of financial resources between states, a phenomenon known as capital flight. However, despite the commitment being reaffirmed in 2025, specific rates were not formalized, nor was a structured model outlined capable of addressing concrete challenges, such as resistance to adherence due to national sovereignty, limitations in the oversight structure, and the need for technological investments for data cross-referencing between states, elements essential to the effectiveness of transnational fiscal equity.

Nationally, the Brazilian tax reform, initiated by Constitutional Amendment number 132/2023 and regulated, in part, by Complementary Law number 214/2025, has been portrayed as a public and legislative response to the broad debate surrounding wealth concentration. Brazil registered a Gini coefficient for per capita household income of 0.506 in 2024 (IBGE, 2025), a level convergent with that reported by the World Bank (2024) for the same period. This reform, the first structural one in Brazil since the 1988 Constitution, promotes the reorganization of the tax system’s design, with constitutional changes to the bases of incidence, the division of powers, and the logic of consumption taxation, according to the classic distinction between structural tax reforms and incremental adjustments formulated by Musgrave (1989). Although it does not include the institution of a Wealth Tax, the reform is not indifferent to high-value taxation by making the progressivity of ITCMD mandatory and by extending IPVA to aquatic and aerial vehicles, reaching high-value assets that were historically outside the scope of effective wealth taxation.

In this context, the present work analyzes the impacts of structural tax reforms focusing on progressivity and high-value taxation, examining their effects on fiscal policy and the promotion of social justice, as well as their repercussions on macroeconomic and microeconomic indicators. Contrasting a model characterized by direct structural reforms of wealth taxation, such as the French one, with the Brazilian experience, marked by predominantly incremental and indirect reforms. The study seeks to evaluate to what extent high-value taxation can contribute to more equitable economic development. In this sense, the research seeks to answer the following question: does the adoption of mechanisms for taxing large fortunes or high-value assets constitute a legally viable and economically effective path for the realization of fiscal and social justice in Brazil?

2. Material and Methods

The present study adopted a qualitative methodological approach, of a theoretical-descriptive and analytical-comparative nature, developed as a multiple case study. This strategy allowed for the examination of complex phenomena in their real institutional contexts, as advocated by Yin (2015, pp. 18–20). The research articulated elements of tax management and political economy, using the methodology of comparative law, according to Zweigert and Kötz (1998, pp. 34–36), to confront models of tax reforms.

The research focus was on the analysis of structural tax reforms, with an emphasis on progressivity and high-value taxation, comparing the French and Brazilian models. The French experience was selected as a reference due to the institutional longevity of its wealth taxation model and the overcoming of challenges analogous to those faced by Brazil, such as the lag in the valuation of real estate.

The notion of structural tax reform used was based on the classic public finance literature, according to Musgrave (1959, p. 6-9; 1989, p. 12-15), who distinguishes them from parametric adjustments by altering the architecture of the tax system and its central incidence bases.

Data collection procedures began with a bibliographic survey on progressivity and fiscal justice. Subsequently, a documentary survey of structural tax reforms in France and Brazil was carried out. Relevant legislative and historical milestones for high-value taxation were covered.

In the French context, the institution of the Impôt sur les Grandes Fortunes (IGF) from 1982 to 1986, the creation of the Impôt de Solidarité sur la Fortune (ISF) from 1989 to 2017, and the 2018 reform, which consolidated the Impôt sur la Fortune Immobilière (IFI) and introduced the Prélèvement Forfaitaire Unique (PFU) on capital income, were analyzed.

For Brazil, the documentary survey included the analysis of taxation in the Constitution of the Federative Republic of Brazil of 1988, Constitutional Amendment number 132/2023, Complementary Law number 214/2025, and Law number 15.270/2025, which established the taxation of profits and dividends. These documents were examined to understand the evolution and characteristics of national Tax Reforms.

Complementarily, secondary macroeconomic and social data were collected. These data were organized into magnitudes such as product (real GDP per capita), income (Gini coefficient and share of top income groups) and wealth (share of top income groups in total wealth). To these magnitudes, the collection of wealth taxes was added, expressed as a proportion of GDP and total tax revenue.

The microeconomic effects related to asset allocation, capital mobility, investment decisions and business structures, and consumption patterns and luxury goods were also analyzed. The macroeconomic and social data collected refer to the period from 1986 to 2024 for both countries.

In the treatment of secondary data and in the support of textual structuring, an artificial intelligence tool was instrumentally employed, restricted to operational support. However, critical analysis, data interpretation, and methodological choices remained the responsibility of the authors, in observance of the principles of transparency and intellectual authorship (Floridi, 2018, p. 694-696; OECD, 2019, p. 15-18).

The data analysis technique consisted of an international comparative analysis of multiple cases, examining French experiences with high-value taxation and the Brazilian tax system. The focus of the analysis was the evaluation of the revenue and distributive impacts of the selected reforms, and the identification of institutional approximations and divergences between the legal systems. The study has limitations inherent to its qualitative nature, supported by bibliographic, documentary sources, and aggregated secondary data, without econometric treatment or access to fiscal microdata, which prevented the direct measurement of behavioral elasticities and the causal attribution of effects to the analyzed reforms.

3. Results and Discussion

The analysis of high-value taxation reveals that its contribution to more equitable economic development and to the realization of fiscal and social justice depends on a coherent normative and institutional arrangement. This study, by comparing French and Brazilian experiences, identified that the effectiveness of taxation on large fortunes or high-value assets is not limited to the mere creation of new taxes. On the contrary, it requires the strengthening of progressivity, a robust tax administration, adequate measurement of the taxable base, enforcement efficiency, and international cooperation, crucial elements for a more equitable tax system.

Fiscal progressivity, understood as the gradual increase in tax rates according to the growth of the taxable base, is a pillar of fiscal justice, as established in Article 13 of the Declaration of the Rights of Man and of the Citizen of 1789. In Brazil, the principle of ability to pay, which underlies progressivity, was enshrined in the Constitution of 1946 and reaffirmed in the Constitution of 1988, in Article 145, §1. This perspective, as highlighted by Carrazza (2018), aims to ensure that the tax burden is distributed more intensely among those with greater economic capacity, avoiding disproportionate burdens and preserving the existential minimum.

The French experience with high-value taxation, despite undergoing significant changes, demonstrates the possibility of preserving progressivity through institutional improvement and standardization of asset valuation criteria, which reduces asymmetries and increases constitutional compliance (Piketty, 2020; OECD, 2018). In contrast, the German experience, by declaring the unconstitutionality of the Wealth Tax (IGF) due to flaws in valuation criteria, according to BVerfGE 93, 121 (1995), highlights the risks of high-value taxation without adequate technical bases. Progressivity, therefore, is not an autonomous principle, but a technique for graduating tax rates that reflects greater taxpaying capacity, promoting the redistribution of the tax burden (Amaro, 2012; Weiss, 2014).

Structural tax reforms in France

In France, the post-war period marked the consolidation of fiscal progressivity, in contrast to the previous liberal tax system, which predominantly burdened consumption and labor income, with limited redistributive function (Piketty, 2014). The introduction of the Impôt sur les Grandes Fortunes (IGF) in 1982, and later the Impôt de Solidarité sur la Fortune (ISF) in 1989, represented a political and moral choice to reaffirm social solidarity and redistribute economic burdens (Rosanvallon, 2011). The ISF, in effect until 2017, applied to the net worth of taxpayers residing in France who exceeded a minimum annual amount, with progressive rates ranging from 0.5% to 1.5%, covering real estate, financial investments, and corporate holdings (El-Jaick, 2018).

Despite its redistributive potential, the ISF faced challenges related to tax evasion and international capital mobility, especially in open economies (Piketty, 2020; OECD, 2018). Institutional analyses indicated that the ISF contributed to the outflow of high-income taxpayers and discouraged productive investment, compromising the country’s economic competitiveness (Conseil des Prélèvements Obligatoires, 2018). In response to these limitations, the French tax reform of 2018 replaced the ISF with the Impôt sur la Fortune Immobilière (IFI), which restricted the tax’s scope to high-value real estate assets, considered less mobile and more easily taxable (Piketty, 2019).

The IFI, with progressive rates between 0.5% and 1.5% for real estate assets exceeding 1.3 million euros, maintained mechanisms for partial exemption for the primary residence and deduction of debts related to the properties, aiming to avoid confiscatory effects and ensure proportionality of incidence (Siqueira; Nogueira; Souza, 2001). In terms of revenue, IFI revenues totaled 1.29 billion euros in 2018, reaching 1.83 billion in 2022, an increase of 42% in four years. This growth was mainly attributed to the expansion in the number of taxpayers, from 133,000 to 164,000, and the increase in the average tax, from 9,700 to 11,200 euros. However, ISF revenue in 2017 was over four billion euros, indicating a budgetary cost of the substitution exceeding four billion euros (France Stratégie, 2023).

Ex post findings, however, suggest that the behavioral effects of high-value taxation were less intense than ex ante estimates. The Committee for the assessment of capital taxation reforms noted a reduction in the number of tax expatriations and an increase in returns after 2018, without significant reorientation of portfolios to the detriment of real estate assets (France Stratégie, 2023). This reinforces the idea that the effectiveness of high-value taxation depends less on the isolated design of the tax and more on the institutional capacity for measurement, enforcement, and international cooperation that supports it, according to the literature (CONSEIL DES PRÉLÈVEMENTS OBLIGATOIRES, 2018; Piketty, 2019).

Other progressive modalities

France complements wealth taxation with other progressive modalities, such as the Prélèvement Forfaitaire Unique (PFU), which applies to capital income, such as profits, dividends, and capital gains. Although the PFU adopts a uniform rate, its introduction in 2018 should be viewed in the systemic context of the tax reform, where progressivity has focused on taxing high-value real estate assets and capital income flows. This arrangement allows for the preservation of fiscal justice while reducing incentives for evasion and international capital mobility (OECD, 2018; Piketty, 2019).

The Impôt sur le Revenu (individual income tax) is another pillar of French progressivity, structured in multiple brackets with marginal rates that can exceed 45% for high annual incomes (Pacheco Bomfim, 2024). Mechanisms such as the Quotient Familial adjust the taxable income calculation to family composition, promoting greater equity (Nascimento, 2021). Furthermore, capital income can opt between a flat rate of 30% or the progressive income tax brackets, providing flexibility and preserving the ability to pay.

Mandatory social contributions, such as the Contribution Sociale Généralisée (CSG) and the Contribution pour le Remboursement de la Dette Sociale (CRDS), apply to various sources of income and assets, reinforcing the progressivity of the tax system (El-Jaick, 2018). Although the CSG is not formally progressive, its broad incidence and the exemption of lower incomes contribute to the redistributive nature of the system, with revenue allocated to financing social security (Pacheco Bomfim, 2024). Taxation on inheritances and donations is also progressive, considering the transmitted value and degree of kinship, with rates that can exceed 45% for large transfers between non-relatives (El-Jaick, 2018; OCDE, 2021a).

France also uses progressive taxes on luxury goods and specific activities, such as the Taxe sur les Véhicules de Luxe and the Taxe sur les Logements Vacants (Pacheco Bomfim, 2024), in addition to environmental progressivity mechanisms, such as the Contribution Climat-Energie. These modalities, combined with robust enforcement policies and integration of fiscal information, form a sophisticated institutional architecture that allows for the financing of inclusive public policies (Nascimento, 2021). The effectiveness of high-value taxation in France, despite debates on capital mobility and evasion, is supported by a sophisticated administrative apparatus and international cooperation mechanisms, essential for the sustainability and legitimacy of the system (El-Jaick, 2018; Siqueira; Nogueira; Souza, 2001; Nascimento, 2021).

Structural tax reforms in Brazil: CRFB/88 and 2025 tax reform

In Brazil, the 1988 Constitution provides for the Union’s competence to institute the Tax on Large Fortunes (IGF) and enshrines progressivity as a normative guideline, based on the ability to pay (Carrazza, 2018; Carvalho, 2019). However, the Brazilian tax structure is marked by the predominance of indirect taxes, which fall on consumption and tend to be regressive, burdening lower-income groups more. Direct taxes, such as income tax, although progressive, have their redistributive effectiveness limited by the narrowness of the tax brackets, by the favored treatment of capital income, and by the distortions generated by exemptions and deductions (Gobetti; Orair, 2016; Leonetti, 2003).

Progressivity is also admitted in wealth taxes such as the Inheritance and Donation Transfer Tax (ITCMD) and the Urban Land and Building Tax (IPTU), according to Constitutional Amendment number 29/2000. However, the ITCMD has modest rates, with a constitutional ceiling of 8%, lower than that practiced in developed countries, and suffers from delays in updating market values and the fragility of inspection mechanisms, which reduces its redistributive potential (Castañeda; Vieira, 2026; Costa Filho, 2024). This fragmented and low-fiscal-intensity structure contributes to the maintenance of a poorly progressive tax system, incapable of reaching the highest wealth layers.

Beyond classic progressivity, the Brazilian tax system admits indirect and functional manifestations, such as the Motor Vehicle Property Tax (IPVA), especially in its environmental aspect, and taxes subject to the selectivity principle, such as the Tax on Circulation of Goods and Services (ICMS) and the Tax on Industrialized Products (IPI). The differentiated tax burden on essential and superfluous goods can produce indirect progressive effects, acting as a technique for realizing the ability to pay by reducing the weight of taxation on the essential consumption of lower-income groups (Derzi, 2017). The 1988 Constitution also enshrined the extra-fiscal progressivity, such as the progressive IPTU over time and the progressive Rural Land Tax (ITR), to induce behaviors and promote the social function of property (Torres, 2018).

The 2025 tax reform, through Constitutional Amendment number 132/2023 and Complementary Law number 214/2025, promoted a restructuring of indirect taxation by replacing cumulative consumption taxes with a Value Added Tax (VAT) model, materialized in the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS). Although VAT is not intrinsically progressive, its institutional conformation, associated with full non-cumulativeness, selectivity, and partial tax refund to lower-income groups, can generate relevant distributive effects, mitigating regressive distortions and bringing the tax system closer to the principle of ability to pay (Musgrave, 1959).

Complementarily, Law number 15.270/2025 ended the exemption of profits and dividends distributed to individuals, in effect since 1995. This innovation articulates the expansion of the individual income tax exemption bracket, the 10% withholding tax on profits and dividends paid by the same legal entity to an individual resident in an amount exceeding fifty thousand reais monthly, and the institution of the Minimum Individual Income Tax (IRPFM) for annual income exceeding six hundred thousand reais. The IRPFM, although not a progressive tax in the strict sense, acts as a floor for effective taxation, correcting regressivity at the top of the distribution, where the predominance of exempt income reduced the effective tax rate. Its logic approaches the French PFU, replacing formal progressivity with functional progressivity, evaluated in the aggregate result of the tax system (Piketty; Saez, 2016; OECD, 2022).

Tax progressivity, as an expression of taxable capacity, is a structuring element of modern fiscal systems. The adoption of wealth taxes, such as the tax on large fortunes, does not inaugurate progressivity but emerges as a logical extension of a system already structured on progressive bases (Musgrave, 1959). In the French case, the tax on large fortunes is inserted into a historical context of consolidated progressivity, acting as a complementary instrument to curb wealth concentration and reinforce the redistributive legitimacy of the welfare state (Piketty, 2014). In Brazil, the effectiveness of progressivity has been limited by the regressive structure of consumption taxation and the historical exemption of capital income. The Tax Reform and the taxation of profits and dividends represent an advance in the realization of progressivity, bringing the Brazilian system closer to international standards (Torres, 2016; OECD, 2022).

Secondary data

Macroeconomic data: GDP, HDI and Gini coefficient

The joint analysis of product, income, and wealth requires distinguishing between these quantities. Gross Domestic Product (GDP) is an aggregate flow measure, while income is an individualized flow measure, whose inequality is captured by the Gini coefficient. Wealth, in turn, is a stock measure, resulting from the accumulation of unconsumed income flows over time, plus intergenerational transfers and asset appreciation. The relationship between these quantities is asymmetric; product growth does not imply distributive improvement of income, and the reduction of income inequality does not necessarily lead to wealth deconcentration (Piketty, 2014; Stiglitz; Sen; Fitoussi, 2009). The Human Development Index (HDI) incorporates the dimension of development as an expansion of capabilities, aggregating income, education, and longevity (Sen, 1999).

In France, throughout the existence of the IGF, ISF, and IFI, real GDP per capita and the HDI showed a continuous growth trajectory, and the income Gini coefficient remained relatively stable, with fluctuations compatible with economic cycles and exogenous shocks (Alesina; Perotti, 1996). No significant inflection in these series could be directly associated with the creation, revocation, or reconfiguration of high-value taxation institutes, a result consistent with the findings of Piketty (2014). The examination of revenue clarifies this absence of visible effect: ISF revenues in 2017 were slightly above four billion euros, and IFI revenues in 2022 were 1.83 billion. These values correspond to approximately two tenths and less than one tenth of one percent of French GDP, respectively, and to a fraction less than half a percent of total revenue (France Stratégie, 2023). An instrument of this magnitude does not, by design, have the capacity to shift macroeconomic aggregates, but rather to selectively reach the top of the wealth distribution, a dimension that aggregate indicators do not capture.

In Brazil, the joint reading of these indicators reveals a mismatch. Per capita GDP showed a trajectory marked by cycles, with expansion in the 2000s and stagnation from the mid-2010s onwards, influenced by macroeconomic shocks, regime changes, and variations in international commodity prices (Alesina; Perotti, 1996). Income inequality, measured by the Gini coefficient, registered a relevant reduction from the 2000s, attributed by the literature to the expansion of redistributive policies, increased social spending, minimum wage appreciation, and income transfer programs, rather than to changes in the wealth taxation model (Soares, 2010; Medeiros; Souza, 2014). The HDI, in turn, showed a continuous increase, associated with expanded access to essential public services (PNUD, 2013).

The reduction in income inequality observed during the period coexisted with the maintenance of high wealth concentration at the top of the distribution, which confirms the asymmetry between flow and stock. This corresponds, at the tax level, to the modest participation of wealth taxation in the Brazilian tax burden, much lower than that observed in France, where taxes on property and transfers represent a significantly larger share of the product. In other words, the stability of wealth concentration in Brazil does not stem from the ineffectiveness of high-value taxation, but from its reduced effective intensity. The evaluation of high-value taxation should be conducted on a scale compatible with its object, as a mechanism for containing the concentration of wealth stock and legitimizing the tax matrix, and not as a growth policy or the main instrument for redistributing current income (OECD, 2018; Piketty, 2014).

Effects of microeconomic data

The analysis of the microeconomic effects of wealth taxation, based on specialized literature, reveals how individuals, families, and companies respond to tax incentives. These effects tend to manifest in asset reorganization, capital mobility, investment decisions, and consumption patterns. Although they do not produce visible disruptions at the aggregate level, taxation on large fortunes generates selective behavioral adjustments, especially among taxpayers who concentrate income, wealth, and planning capacity. The absence of significant changes in macroeconomic indicators does not eliminate the hypothesis of relevant effects, indicating that such effects manifest in a more localized, selective, and behavioral manner (Stiglitz; Sen; Fitoussi, 2009; OECD, 2018).

Asset allocation and estate reorganization

Among the most relevant microeconomic effects of wealth taxation is how agents reorganize their assets in the face of tax incidence. The increase in the tax burden on certain assets, rights, or structures encourages asset substitution, wealth diversification, and the adoption of legal instruments to reduce tax costs. The analysis of asset allocation is crucial to verify whether wealth taxation produces concrete distributive effects or merely stimulates wealth rearrangements that preserve economic concentration (Gobetti, 2018; Nascimento Júnior, 2019).

In the French case, the experience of the Impôt de Solidarité sur la Fortune (ISF) demonstrated that wealth taxation can, in fact, induce reorganization strategies, such as the search for relatively less burdened assets, including works of art and international investments. However, taxpayer response did not result in a broad erosion of the tax base, largely due to the French state’s greater administrative capacity and the effectiveness of international tax cooperation instruments (OECD, 2021b; Baker, 2005). This indicates that the system produced incentives for wealth adaptation, but the institutional environment reduced the scope for more extensive tax evasion.

In Brazil, the situation is distinct. The low effective tax incidence on large estates, coupled with the fragility of monitoring mechanisms and the reduced integration between property records and tax bases, expands the scope for reorganization strategies. Family holdings, complex corporate structures, and asset segregation mechanisms function not only as private management but also as instruments for mitigating tax incidence (Gobetti, 2018; Nascimento Júnior, 2019). This reality compromises the revenue potential and the redistributive function of wealth taxation.

Capital mobility and asset transfer

Capital mobility is a central aspect of microeconomic analysis, as higher-income and wealthier taxpayers often have more technical, legal, and financial conditions to move assets, internationalize wealth, and exploit regulatory differences between jurisdictions. The effectiveness of taxation on large fortunes, therefore, cannot be examined solely by the tax rate or tax base, but also by the state’s capacity to control asset flows and cooperate internationally on fiscal matters.

In Brazil, the low articulation between registries, the fragility of patrimonial inspection instruments, and the limited transparency of certain legal structures favor the displacement of assets to environments less visible to tax control. This scenario expands the space for aggressive tax planning strategies, reducing the revenue potential and the redistributive function of patrimonial taxation. Tonelli Júnior (2015) demonstrates that, in contexts of weaker inspection, capital mobility tends to empty a relevant part of the effectiveness of taxation on wealth.

In France, although there are also incentives for fiscal expatriation due to the higher tax burden on certain assets, the effects of this movement were more contained. The explanation lies not only in the design of the tax but in the consistency of the French tax administration’s enforcement instruments, in information exchange, and in international cooperation (OECD, 2021b; Baker, 2005). This increases the cost of asset displacement aimed exclusively at tax evasion or avoidance, restricting the intensity of the phenomenon. In theoretical terms, tax progressivity only translates into practical effectiveness when the State manages to limit wealth displacement strategies.

Investment decisions and business structures

Wealth taxation also influences investment decisions and the legal organization of assets by agents. This point is relevant to verify whether the tax system favors productive investments or, on the contrary, stimulates structures primarily aimed at wealth protection and tax savings. The microeconomic analysis of investment allows us to verify whether the tax design contributes to a more efficient allocation of capital or induces distortions associated with the protection of accumulated wealth.

In Brazil, the low effective incidence on certain forms of capital and on higher income distribution segments contributes to the proliferation of corporate arrangements aimed at tax optimization. In many cases, these structures are not primarily linked to productive expansion, but to wealth preservation and tax burden reduction. The result is a dynamic in which wealth planning can prevail over the economic logic of investment, limiting redistributive effects (Gobetti, 2018; Nascimento Júnior, 2019).

The French experience points in a different direction, with the coexistence of progressive wealth taxation and incentives for productive investments, revealing an attempt to balance fiscal justice and economic efficiency. Although the incidence on large fortunes may generate costs and disincentives in certain situations, the French system demonstrates greater institutional coherence and capacity to reconcile wealth taxation with the preservation of productive economic activities. This suggests that wealth taxation does not inevitably lead to investment retraction; its effects depend on the regulatory environment in which it is inserted and the predictability of the institutional arrangement that sustains it, considering the interaction between taxation, complementary incentives, and the State’s administrative capacity.

Consumption patterns and luxury goods

The effects of wealth taxation also extend to consumption patterns, especially in the luxury goods market. Although not the most decisive axis of the debate, it is a relevant indicator for understanding whether the tax system reaches the upper strata of the distribution and interferes with behaviors associated with the reproduction of inequality. In France, the general regime applies a Value Added Tax (VAT) of 20% to most sales of goods and services, including imports (BOFIP, 2014).

In Brazil, the tax burden on consumption results from the combination of indirect taxes, causing a significant portion of the fiscal burden to fall on consumption, including on high-value goods. During the reform’s transition period, the current taxes IPI, ICMS, ISS, PIS, and Cofins still coexist with CBS and IBS, making direct comparison by a single rate difficult. Furthermore, for international purchases, the Federal Revenue reports a 60% Import tariff/ duty incidence, reduced to 20% in specific hypotheses of the Remessa Conforme program for purchases up to US$50, added to the 17% ICMS (or 20% in some states), which can cause the Brazilian tax burden to exceed the French taxation based on the 20% VAT (Federal Revenue of Brazil, 2026).

In comparative terms, it cannot be stated that Brazil always taxes high-value goods more than France, but it is possible to state that the Brazilian tax burden tends to be more burdensome or, at the very least, more complex. However, this does not mean that the system operates in a truly progressive manner. Consumption taxation does not replace the distributive function of consistent taxation of high-value goods, because it does not directly affect accumulated wealth nor does it substantially modify the mechanisms of its preservation and transmission (Gobetti, 2018; Nascimento Júnior, 2019). In France, the combination of progressive wealth taxation and tax incidence on specific manifestations of high-value goods gives greater distributive density to the system.

The French experience reveals a greater capacity to impose fiscal costs on the upper strata and to integrate this incidence into a broader design of progressivity. The central point is that the redistributive effects related to consumption do not simply stem from the taxation of high-value goods, but depend on the articulation between taxation on wealth, income, and consumption. In the Brazilian case, the low effective tax burden on high-value goods, combined with the fragility of control mechanisms and limited administrative capacity, reduces the redistributive scope of the system and expands the space for wealth reorganization, internationalization of assets, and tax planning, weakening the fiscal justice function of high-value taxation (Gobetti, 2018; Nascimento Júnior, 2019; Tonelli Júnior, 2015). In France, the greater progressivity of the tax system, associated with robust tax administration and more effective mechanisms for inspection and international cooperation, reduces the intensity of these strategies and expands the distributive effectiveness of tax policy, indicating that the taxation of large fortunes can constitute a relevant instrument of progressivity when articulated with a coherent regulatory design and state enforcement capacity (OCDE, 2021b; Baker, 2005).

In summary, the study demonstrated that high-value taxation constitutes a relevant instrument for the promotion of fiscal justice, the effectiveness of which, however, does not stem solely from the normative provision of new taxes. It depends on structural reforms aimed at progressivity, tax administration, adequate measurement of the taxable base, and efficiency in inspection and coordination between instruments affecting income, wealth, and consumption. For Brazil, it is fundamental to continue evolving in this direction, consolidating the implementation of ITCMD progressivity, the expanded competence of IPVA, and the taxation of profits and dividends. The effectiveness of more robust instruments, such as the IGF or similar to the IFI, requires careful valuation of assets, investment in technology, incentives, and international agreements that enable their operationalization. Only with the articulated advancement of these dimensions will it be possible to consolidate, in terms comparable to those observed in France, high-value taxation in Brazil as an effective instrument for promoting fiscal justice, without distorting revenue collection.

4. Conclusion

This study assessed the contribution of high-value taxation to more equitable economic development and analyzed the legal viability and economic effectiveness of mechanisms for taxing large fortunes or high-value assets for the realization of fiscal and social justice in Brazil. It was found that the French experience with taxes on large fortunes, such as the ISF and IFI, did not generate significant inflections in aggregate macroeconomic indicators, but demonstrated redistributive potential when supported by robust administrative capacity and international cooperation. In contrast, in the Brazilian context, the low effective intensity of wealth taxation contributed to the maintenance of wealth concentration, despite the observed reduction in income inequality. Microeconomic findings revealed that, although wealth taxation can induce asset reorganization and capital mobility, the effectiveness of these instruments depends crucially on the state’s capacity for measurement, oversight, and international coordination, elements more consolidated in France.

The main contribution of this work lies in demonstrating that the effectiveness of high-value taxation for fiscal justice is not limited to the mere creation of new taxes, but requires a coherent normative and institutional arrangement, focused on strengthening progressivity, tax administration, adequate measurement of the taxable base, and enforcement efficiency. The study, of a qualitative and comparative nature, without econometric treatment or access to fiscal microdata, had its conclusions limited by the impossibility of directly measuring behavioral elasticities or attributing direct causality to the reforms. For Brazil, the continuation of the consolidation of ITCMD progressivity, the expanded competence of IPVA, and the taxation of profits and dividends are recommended. It is suggested that the implementation of more robust instruments, such as the Wealth Tax or similar to IFI, requires careful valuation of assets, investment in technology, and the establishment of international incentives and agreements that enable its operationalization, ensuring the promotion of fiscal justice without revenue distortions.

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Article originating from the Final Course Work of the Specialization in Tax Management of the MBA USP/Esalq

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