Redistributive taxation and economic complexity: An analysis of Brazilian municipalities

Abstract

The literature on economic complexity argues that the manufacture of complex goods favors a more equitable distribution of income. This study extends the analysis by using Urban Land and Property Tax (IPTU) collection data to verify whether the recording of income redistributive taxes is influenced by the degree of complexity of the productive structure. System-GMM panel regressions and Granger causality tests for 5,568 Brazilian municipalities between 2007 and 2017 are used to perform robust statistical tests to the endogeneity problem. The results indicate that the presence of a more complex productive structure positively influences the recording of redistributive taxes. Other factors, such as the number of public servants and the level of qualification of the civil servants, show that the degree of structuring of local governments also influences the presence of redistributive taxes.