Income and wealth inequality in Brazil TYPICAL SOURCES OF INCOME To investigate the typical sources of income for the rich, we build on the findings of Gomes et al.(2022). It should be pointed out that, in order to evaluate the heterogeneous in­come compositions of distinct demographic groups, espe­cially with regard to gender and racial hierarchies, the au­thors opted not to adjust data obtained from POF 2017– 2018 with the DIRPF administrative data. This allowed them to be able not only to look at the different sources of in­come for the populations of interest, but also to calculate the tax rate for different demographic groups according to their relative position in the income distribution structure. For both purposes, however, it is important to remember that household surveys such as POF, as mentioned, underes­timate the true level of income inequality. Notwithstanding these limitations, one of the main findings of Gomes et al.(2022) is that among the top 1 per cent there are significant differences between white men and other demographic groups with respect to the main income sources(Graph 5). More specifically, while white men in the top percentile earn almost half of their income as self-de­clared employers, black men in the same income group earn only 7 per cent of their income as self-declared employers. It is mostly employment in the formal and public sectors that generate black people’s and white women’s income 4 . In contrast, the income share of public servants for white men in the top percentile is 19 per cent. Moreover, formal work­ers appropriate much less: 36 per cent of total income. This has important consequences for taxation. WEALTH INEQUALITY IN BRAZIL and are primarily derived from an extrapolation of income inequality data rather than on direct sources of information regarding asset distribution. Given the difficulty of finding adequate data sources on the distribution of wealth in Bra­zil, most of the estimates for wealth inequality are unrelia­ble or at least subject to methodological limitations. As Me­deiros(2015) emphasises, evidence based on DIRPF(per­sonal income tax statements) usually underestimates the wealth of the rich, given the undervaluation of self-de­clared assets(usually declared by their original purchase val­ue and not their true market value), tax evasion, patrimoni­al confusion with legal entities and fraud. Also, the impos­sibility of individualising the wealth of married couples inev­itably distorts the results, regardless of the methodology used to separate it. Despite these difficulties, by combining PNADc(research based on a sample of Brazilian households) with DIRPF, one can corroborate and gather important information regard­ing income and wealth profiles. From these combined data, Martins, Arthen and Gomes(2024) found that only 27 per cent of Brazilian individuals possess some wealth. However, this wealth is strongly concentrated at the top of the distri­bution structure, with 0.2 per cent of wealthiest individuals having an average wealth of R$ 13 million, whereas the av­erage wealth of the population as a whole is R$ 97.208. Fur­thermore, in addition to the unequal distribution of Brazilian wealth among individuals, the composition of wealth is striking, i. e. how it is distributed according to each quantile of income share. One may see, in Graph 6, that as we pro­gress in income distribution towards 0.2 per cent, the pro­portion of physical assets decreases, whereas financial as­sets become the most important form of wealth. According to the World Inequality Database(WID), in 2001, 73.7 per cent and 41.1 per cent of Brazilian national wealth was concentrated in the hands of the top 10 per cent and top 1 per cent, respectively. The share of the bottom 50 per cent, on the other hand, was only 1.2 per cent. Almost two decades later, in 2019, the top 10 per cent and the top 1 per cent appropriated 79.6 per cent and 48.3 per cent of na­tional wealth, respectively, while the bottom 50 per cent registered negative participation in national wealth at –0.4 per cent, which means that a remarkable wealth ine­quality is both cause and effect of a profound income ine­quality in Brazil. These results should be interpreted with caution since they are based on a series of imputations(Bajard et al., 2021) 4 It is worth noting that black women stand out as the only demo­graphic group with a reduced participation of self-employed work­ers among the top 1 per cent earners: less than 10 per cent of their total income is appropriated by these workers, while this share rises to around 20 per cent for white people and black men. At the same time, the share of income related to self-declared employ­ers is higher for black women(almost 20 per cent) in comparison to black men and white women. Since black women represent a small fraction of top earners, these differences might be related to eco­nomic phenomena. 7