ISSN: 0124 - 59968

Abstract

This paper develops a model that assumes politicians rationality when fixing tax rates applied on revenue and consumption of each taxpayer. The paper also suggests some factors to consider are political mobility of voters and economic expectations, which can explain regressive tax reforms adopted in Latin America since the economic crises of the 80s. Additionally, it contrasts the model with an unbalanced data panel (18 countries from 1980 to 2010).