Redistributive philosophies and incentives Consider a society consisting of two people. Gilberto earns an income of $90,000 per year and Juanita earns an income of $20,000 per year. The government is considering a redistribution plan that would impose a 25% tax on Gilberto's income and give the revenue to Juanita. Without any incentive distortion, Gilberto would retain $67,500 and Juanita would end up with $42,500. However, let us assume that since Gilberto will not receive all the income he earns, he decides to work less and earn an income of only $75,000, of which 25 % x $75,000-$18,750 will be owed in taxes. With the redistribution plan, Gilberto will take home an income of $ .............. The 18,750 that Gilberto pays in taxes will be transferred by the government to Juanita. Let us assume that since Juanita now receives payment from the government, she will not work as many hours and will earn an income from work of only $16,000 instead of her initial $20,000. With the redistribution plan, Juanita's total income (including the government payment received) is now $ .............