How much redistribution and poverty reduction is being accomplished in Latin America
through social spending, subsidies, and taxes? Standard fiscal incidence analyses applied
to Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay using a comparable methodology
yields the following results. Direct taxes and cash transfers reduce inequality and poverty by
nontrivial amounts in Argentina, Brazil, and Uruguay but less so in Bolivia, Mexico, and
Peru. While direct taxes are progressive, the redistributive impact is small because direct …

We apply a standard tax-and-benefit-incidence analysis to estimate the impact on inequality
and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food
transfers and in-kind transfers in education and health). The extent of inequality reduction
induced by direct taxes and transfers is rather small (2 percentage points on average),
especially when compared with that found in Western Europe (15 percentage points on
average). What prevents Argentina, Bolivia, and Brazil from achieving similar reductions in …