ABSTRACT
In this chapter, the authors utilize the estimation results from Labeaga et al to compute the ex post patterns of labour supply of the agents. They perform an arithmetical simulation on the remaining part of the population in the sample. The model replicates social contributions levied on wages and on self-employed workers and income taxes. The Personal Income Tax (PIT) system was again reformed in 1999, and the subsequent equity and efficiency effects have been the subject of both political and academic debate. The debate over the suitability of the reforms to the Spanish redistribution system is still open. In order to explore the ensuing implications on welfare and redistribution, they carry out simulations of the basic income-flat tax reform (BIFT) and the vital minimum-flat tax (VMFT) reforms. To facilitate the redistribution analysis, the basic income or vital minimum has been chosen to respect the government's budget constraint in an arithmetical framework.
