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restricted to be equal. The following parameters have been set as the same ones for both
taxes: realized capital gains taxed at 18% fixed rate, labor allowances calculated according
to the formula introduced by the reform and a 15% tax credit on housing investment (capital
and mortgage interest rates). Other limits related to private pension contribution are also
fixed to be the same ones. Once these changes had been introduced in the tax before reform,
the aggregate revenue and average tax rate were computed to simulate the tax schedule which
produced the same revenue as the dual tax.

Pre-reform tax schedule			Dual tax schedule
	(1)	(2)	_______________________(3)
0-4,000e	15%	12.50%	0-17360e	24%
4,000-13,800e	25%	21.75%	17360-32360e	28%
13,800-25,800e	30%	25.85%	32,360-52,360e	37%
25,800-45,000e	37%	35.15%	>52360e	43%
>45.000e	45%	43.35%
Capital gains	15%	18%	Savings base	18%

Table 3. Tax rates structure of simulated taxes

In this exercise we focus on comparing taxes (2) and (3), that are the previous tax schedule
that produces the same revenue than the dual tax and the dual tax itself, respectively. Tax
burden comparisons are based on net tax liabilities, since, in both taxes, tax credit are
approximately equal in both taxes. In the context of this two yield-equivalent tax comparison,
we can say that differences, if any, in post-tax income distribution between the pre-tax
and post-tax reform are mainly related to the three points outlined above. Obviously, the
distribution of gainers and losers we should expect from this analysis is also related to those
fiscal changes.

As a first result of this simulation, we stress that the reform produces a large number of
losers: a 45.60% tax payers pay more than they would have to pay before reform, against
a 35% percentage of gainers. Approximately 25% of the recipients are indifferent between

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