To narrow down the focus of the question, I want to know how would one depict a reduction of indirect taxes on the Lorenz Curve of a country. In my opinion, the reduction of taxes will increase the level of inequity and so the Gini Index must increase. Thus, the initial Lorenz Curve of a country must shift outwards. However, I came across a problem where the very opposite has been done. Please explain the flaw in my reasoning.
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