GOVERNMENT CONSIDER TAXING MILLIONAIRES TO COMPENSATE FOR INCOME TAX EXEMPTION UP TO R$$ 5 THOUSAND

A brief example of what I believe will happen with this taxation model.

Imagine that there are three markets on your street: Brazil, Argentina and Uruguay.

Mercado Brasil decides to increase the prices of its products, believing that the residents of the region have enough money to pay more and, thus, hopes to increase its revenue. However, what actually happens is that customers start to migrate to the Argentina and Uruguay markets, where prices are lower.

This example illustrates the concept of the Laffer Curve. Just like in the market, if the government increases taxes too much on the richest (as Mercado Brasil did with prices), these people may look for alternatives to avoid paying so much, such as investing in other countries or using legal loopholes to pay less taxes. In the end, the result is the opposite of what was expected: government revenue (or market sales) decreases, as "customers" migrate to other options. In addition to being a disincentive to work and investment, high tax rates discourage millionaires from working harder, innovating or investing in the country.