The Founding Fathers, the American fiscal federalism and the failures of the Brazilian tax system

Abstract

Abstract: This paper analyzes two ideas that inspired the Founding Fathers to design the American tax system: (i)the need to provide each member of the federation with sufficient financial resources which enable them to perform their functions without depending on each other; and (ii)the advantage of adopting a flexible system of taxation. We aim to provide a comparative approach which demonstrates that these ideas explain, in part, some of the failures of the Brazilian tax system, considering that, in Brazil, the fiscal system suffers from an imbalance between tax revenues and duties assigned to the states and municipalities; and that the Brazil’s system’s rigidity exacerbates the financial dependence of states and municipalities.