The name is absent

Tax rates of simulated tax cuts are obtained according to equation (3). For both income
bases, we use parameters a, b, c instead of ρ_i^L , σ_i^L, ρ_j^K , σ_j^K for simplicity. As explained in
Section 2, parameters a and g represent the tax cut as a percentage of the initial fiscal
revenue (10%) and average tax rates calculated as the ratio between gross-tax liabilities
and taxable income, respectively. Parameters c and b are obtained multiplying a by g and
g/(1 - g) respectively. The average tax rate on capital income gK is calculated before a
1, 500e allowance for dividends is applied.

The distribution impact of neutral-revenue tax cuts is measured either globally or locally
at a particular point of the income distribution. Table 2 summarizes the global effect of the
different tax cuts on total revenue, liability progression and income redistribution.

The first column of the Table 2 includes the initial revenue obtained by the microsimu-
lation model and the revenue figures simulated for the three tax cuts. Loss-revenue under
the three tax cuts accounts for approximately 10.50% of the gross-tax liability, instead of
the simulated 10% tax cut. The half point percent of discrepancy between these figures is
mainly due to the initial tax rate applied to the ‘saving base’, 17.27%, which is lower than
¹³Parameter η represents the tax-elasticity coefficient obtained by simulating an 1% increase on the pre-tax
income components of each tax-payer. Taxable-income elasticity is estimated as 1.33643 * Simulated Gross
Tax Liability after 1% pre-tax income increased.

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