Brazil and Dominican Republic tax systems examined for welfare impact

Analysts note that the primary goals of tax system design are efficiency, simplicity, equity and flexibility. Direct taxes on income and corporate profits, indirect taxes on consumption, and social contributions each affect households’ disposable income, influencing overall welfare.

Both direct and indirect levies can create distortions when they alter relative prices between producers and consumers. Progressive tax structures that rely on a few broad-based rates for higher incomes are argued to mitigate inequality, while regressive or additional burdens may worsen it. Policymakers are urged to target tax evasion rather than introduce new regressive taxes, as efficient collection supports public spending without harming economic welfare.