The Politics Of Wealth Reproduction:  Legal crafting and Quiet Deferral Strategies in Brazil’s Tax Reforms 

The issue of wealth inequality has regained intellectual attention over the last decade, as studies increasingly focus on wealth concentration at the top of the distribution (Piketty, 2014; Saez and Zucman, 2016). Recent scholarship shows that wealth preservation relies on strategies aimed at durability and stability, particularly through the manipulation of complex legal structures (Pistor, 2019; Tait, 2019; Beckert, 2022). Tait (2019) conceptualizes this phenomenon as the “law of high-net-worth exceptionalism,” a form of organizational sovereignty available only to a few. In this context, taxation remains a central and most contested policy instrument to address wealth inequality. The political economy of taxation literature demonstrates that elite power is a key determinant of tax reform outcomes and identifies conditions under which taxation becomes politically viable (Fairfield, 2013). However, these studies devote limited attention to the legal crafting of these strategies. This paper addresses these gaps by examining a least-likely case of reform: recent Brazilian legislation increasing taxes on offshore investments and exclusive investment funds (named “super-rich funds”). Although publicly framed as a progressive tax increase—one of the few since Brazil’s redemocratization in the late 1980s (Lazzari and Leal, 2019)—we show that contemporary elite tax disputes are less about nominal rates and more about legal crafting strategies. A granular analysis reveals how the reform’s distributive impact was diluted through legal mechanisms embedded in the legislative process. We propose an analytical framework organized around three interconnected dimensions: public discourse, legal crafting, and the coupling of actors and interests. Across these dimensions, legal expertise plays a central role in shaping outcomes that formally advance progressive taxation while preserving escape routes for the wealthy. Our empirical analysis combines document research, discourse network analysis, and interviews. We analyze legislative amendments and newspaper coverage to reconstruct public discourse and legislative dynamics. Media coverage reveals recurring discursive dyads—such as “pro-revenue versus fiscal balance,” “legal uncertainty versus investment stability,” and “unrealized versus realized gains”—that legitimized tax deferral mechanisms. The analysis of legislative amendments constitutes our second dimension, legal crafting. Amendments were coded by distributive orientation and legal mechanism. Pro-wealth strategies dominated the debate, focusing on rate adjustments, indirect measures related to timing and tax base, and sectoral exemptions. Discursive network analysis shows that pro-revenue amendments were marginal, while tax deferral strategies occupied a central position. The close association between pro-wealth and technical amendments suggests unequal access to legal expertise, enabling more resilient changes. Finally, we examine the coupling of actors and interests, highlighting the roles of executive technocrats, legislators, and legal consultants. The Brazilian case illustrates how distributive conflicts are encoded in seemingly technical legal choices. Rather than openly rejecting progressive taxation, policymakers quietly reintroduced deferrals and narrowed tax bases. These findings underscore the broader implications of the dominance of legal expertise in fiscal policymaking: control over specialized legal knowledge allows actors to shape distributive outcomes while maintaining a vernice of technical neutrality, constraining democratic contestation, and reinforcing power asymmetries in policy processes. (Suggested panel: The Role of Evidence and Expertise in the Policy Process)