Big business and the inequality trap in Latin America: Taxes, Collusion, and Undue Influence

Mar 26, 2021

Big business in Latin America has enormous instrumental power (through mechanisms such as lobbying, media concentration, and malapportionment) and structural power (via capital flight and the threat of disinvestment). Business can wield this power in many ways that – even if not deliberate – increase and sustain inequality. First, business wields its power to keep overall taxation and effective income taxes, in particular, low, thereby depriving the government of resources to redistribute and the ability to lower inequality through taxes. Second, firms collude in many ways that increase costs to poorer consumers and boost income to the rich.

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