Impuestos negativos a la renta en Uruguay: ¿una política redistributiva alternativa?

In this research we evaluate an alternative redistributive scheme for Uruguay. Specifically,we analyze the impacts on equity and efficiency of substituting the new conditional cash transfer program (Asignaciones Familiares – AFAM-) and direct taxes (personal income tax–IRFP-) by a negative income tax (INR), holding fiscal budget constant. Using microsimulations that incorporate behavioral changes, we analyze the effects of this policy change on labor supply, poverty levels and income distribution. The results show that the introduction of an INR, as designed in this study, would not have a redistributive impact higher than the current scheme. Moreover, in terms of efficiency, the policy change would have practically no impact on labor supply.