ABSTRACT
The technical estimates of the effects of the individual income tax reform were calculated using a microsimulation model. Microsimulation models are tools of revenue estimation that are based on individual or microlevel data. Individual income tax microsimulation models include three parts: a microlevel data base, a tax calculator, and an output program that categorizes taxes paid by income group, tax burdens, "winners and losers", and the overall change in tax liability. The data used in the model usually come from a sample of taxpayers, as was done for Guatemala, and contain all relevant information from the tax returns. In Guatemala, such imputations were made by merging the tax return data with data from the National Income and Expenditure Survey. The tax calculator is a straightforward computer program that calculates the actual tax liability for each individual observation in the data set based on current law.
