Date of Submission
Project Advisor 1
Walter Russell Mead
Project Advisor 2
From the Palacio do Planalto to the favelas of Rio de Janeiro, Brazilians have been demanding reforms to their onerous national tax system since they first drafted a democratic constitution in 1988. In 1995, 2003 and again in 2008 the general consensus induced the president to propose sweeping reforms that would alter many aspects of Brazil’s intricate tax structure. In all three cases, however, congress members voted down the most important measures common to each proposal. Many analysts rightly argue that clientelist and regionalist behavior in Congress has undoubtedly helped increase the national tax burden and continues to frustrate tax reform efforts. But these systemic traits, variably common in many democratic countries, are not the fundamental obstacles to reform. It is the president’s strategy of how he imposes losses on powerful interest groups that has impeded legislation. Instead of isolating groups so as to more easily impose losses on them, each of the three gargantuan proposals attempted to impose severe losses on several key groups at the same time. In line with the logic of game theory, those actors who stood to lose from reforms created diverse voting coalitions that transcended party and regionalist politics. While each was too weak to defeat the bill on their own, together they could work to frustrate congressional negotiations. By contrast, Cardoso and Lula succeeded at smaller reforms only when they targeted specific measures within their large proposals. These cases should be clear lessons for the current president, Dilma Rousseff, that she can only expect a systemwide transformation through a long process of small congressional victories.
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Peckham, William Paul, "Too Big To Succeed: Why Brazil Keeps Failing at Tax Reform" (2012). Senior Projects Fall 2012. 3.