The Coexistence of Progressivity with the Separate Personal Income Tax on Capital Gains

Abstract

The purpose of this paper consists of the investigation of the possible coexistence of progressive taxation of capital gains on personal Income Tax implemented by the Law n. 13.259/2016. In the beginning it was shown what there is to known about progressivity, proving that this institute is based of ability-to-pay principle. After that, the paper showed the reasons for which capital gain is taxed separately, focusing on the bunching effect. At last, it was showed that the creation of a special progressive structure violates the coherent legislator’s postulate. In the other hand, the same special progressive structure obeyed the ability to pay principle. After comparing the opposing arguments, it was concluded that there was a possibility of a coexistence of progressivity in the contexto of taxing the capital gain on personal Income Tax, as long as there is a progressive and parallel structure that is inferior to the progressivity apllied to other income species.