Together, this information allows obtaining a reliable estimate of taxes and contributions to FONASA paid by workers, capital earners and pensioners using the schedular rates. In this estimation we assume that workers who do not contribute to the social security system do not pay direct taxes and do not contribute to the Health System Fund. Besides, we assume that workers who contribute do not evade taxes and contributions. Finally, we assume no evasion in the case of capital income and pensions. We estimate the individual’s pre-fiscal income adding taxes and contributions to reported income.<sup>14,15</sup> Pre-fiscal income also contains contributions to the health system paid by employees, private transfers and imputed rent (see Figure 1).

Figure 2 provides a schematic of the different income concepts. It shows pre-fiscal income (market income plus pensions), disposable income, consumable income (although it is not used in this analysis), and adjusted income.

We define Net Market Income as Pre-Fiscal Income less direct taxes and contributions to the health system. Next, we estimate Disposable Income as the sum of Net Market Income and public direct transfers. Information of the ECH on social programs receipt and household composition allows the direct identification of public transfers’ beneficiaries. Besides, the survey also provides the amount of the benefit. Finally, we define Adjusted Income as the sum of Disposable Income and public educational and health transfers. As for in-kind benefits, school attendance, type of school and access to health services allow for the imputation of monetary benefits of public spending into these services. Specifically, administrative data provide total costs by level (for education), and by provider (for health), are first scaled-down using the ratio between disposable income from aggregate sources<sup>16</sup> and the disposable income constructed from the ECH microdata. Finally, the scaled-down costs are divided between the users of the in-kind benefits.

In addition, administrative data and indicators from public programs were publicly available and used as sources to model how each fiscal policy would be affecting individuals and households. This information includes tax brackets, tax refunds, rules on contributions to Social Security, and the functioning of direct and in-kind transfers. As for the aggregate data, it mostly comes from _Rendicion de Cuentas_ (Ministry of Economy and Finance), although some specific information was drawn from each individual source (INEFOP, BPS and MIDES).

Before turning to the results, a few points are worth highlighting. The methodology allows to make very detailed assignments of different policies. For instance, it provides a framework to map the income, type of occupation and family structure in calculating an individual’s personal income tax and deductions. However, the results only reflect a static effect of adding (subtracting) taxes

> 14 Nevertheless, this is still an estimation, and might differ from other calculations. Please refer to Appendix II.

> 15 The estimation of taxes and contributions made by workers are based on the procedure followed by OPP (Simulador de Políticas Públicas versión 2016.0.0, Oficina de Planeamiento y Presupuesto, Presidencia de la República) for 2016. The estimation was adapted to 2017, and this was made with invaluable support from the OPP team.

> 16 Income aggregates for 2017 were estimated by the authors using an extrapolation from macro indicators published by the Uruguayan Central Bank.

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