Brazil's Supreme Federal Court (STF) has declared Congress's omission in regulating the Tax on Large Fortunes (IGF), reigniting debate on its feasibility. Two opinion pieces published in Folha de S.Paulo on January 2, 2026, present opposing views: one argues for positive revenue impact by debunking myths, while the other warns of low potential and international risks.
The STF reignited debate on the IGF by declaring legislative omission, despite 45 bills in the Chamber of Deputies and 5 in the Senate. An opinion piece by the cofounder of Formigas-de-Embaúba, winner of the 2025 Social Entrepreneur Award, argues that taxing large fortunes does have revenue impact. It debunks myths such as the rich working less—citing the 'income effect' that may spur more production—and inevitable tax evasion, stating it depends on a strong state. It also challenges the notion that companies would flee, noting factors like logistical costs and low sectoral mobility in areas like agribusiness. As an example, it references U.S. tax cuts under Donald Trump, which increased public deficit and income inequality. The piece quotes Thomas Paine: 'every accumulation of personal property [...] derives to him from the fact of living in society; and he owes [...] a part of that accumulation back to society'.
In contrast, a tax lawyer from Diamantino Advogados Associados contends it does not. He criticizes the STF's intervention as a violation of separation of powers, as congressional dissent is democratic, not omission. He points to international experiences: OECD countries reduced from 12 to 4 those maintaining the tax, with Germany, Sweden, and others abandoning it due to low revenue, high enforcement costs, and evasion. In France, the tax caused rich migration, leading to a 2018 reform limiting it to real estate. In Brazil, defining 'large fortune' is vague—the government considers super-rich those earning over R$ 600,000 annually—and could trigger investment loss and revenue drops in other taxes like IR and ICMS. Both pieces stress that inequality is a political choice but diverge on the IGF's effectiveness.
