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Add c03260 to _expanded_income and fix handling of c03260 haircut #1032

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Nov 4, 2016
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Add c03260 to _expanded_income and fix handling of c03260 haircut #1032

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eaefba3
Minor setax HC reform difference.
martinholmer Nov 4, 2016
099ef2a
Add c03260 to expaned income; fix handling of c03260 haircut.
martinholmer Nov 4, 2016
5bf832c
Fix typo in comment.
martinholmer Nov 4, 2016
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2 changes: 1 addition & 1 deletion taxcalc/comparison/reform_results.txt
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Original file line number Diff line number Diff line change
Expand Up @@ -36,7 +36,7 @@ Tax-Calculator,1.7,1.8,2.0,2.1
Tax Expenditure,2,2,2,2
""
Eliminate adjustment for self-employment tax
Tax-Calculator,4.2,4.3,4.6,4.8
Tax-Calculator,3.8,4.0,4.3,4.5
""
Eliminate adjustment for self-employed health insurance
Tax-Calculator,6.0,6.3,6.6,6.9
Expand Down
58 changes: 30 additions & 28 deletions taxcalc/functions.py
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Original file line number Diff line number Diff line change
Expand Up @@ -20,7 +20,7 @@

@iterate_jit(nopython=True)
def EI_PayrollTax(SS_Earnings_c, e00200, e00200p, e00200s,
FICA_ss_trt, FICA_mc_trt,
FICA_ss_trt, FICA_mc_trt, ALD_SelfEmploymentTax_HC,
e00900p, e00900s, e02100p, e02100s,
_payrolltax, ptax_was, setax, c03260,
_sey, _earned, _earned_p, _earned_s):
Expand Down Expand Up @@ -51,19 +51,22 @@ def EI_PayrollTax(SS_Earnings_c, e00200, e00200p, e00200s,
setax_ss_s = FICA_ss_trt * txearn_sey_s
setax_mc_p = FICA_mc_trt * max(0., sey_p * sey_frac)
setax_mc_s = FICA_mc_trt * max(0., sey_s * sey_frac)
setax = setax_ss_p + setax_ss_s + setax_mc_p + setax_mc_s
setax_p = setax_ss_p + setax_mc_p
setax_s = setax_ss_s + setax_mc_s
setax = setax_p + setax_s

# compute part of total regular payroll taxes for filing unit
_payrolltax = ptax_was + setax

# compute AGI deduction for "employer share" of self-employment tax
c03260 = 0.5 * setax # half of setax represents the "employer share"

# compute _earned and its individual components
# compute _earned* variables and AGI deduction for
# "employer share" of self-employment tax, c03260
# Note: c03260 is the amount on 2015 Form 1040, line 27
c03260 = (1. - ALD_SelfEmploymentTax_HC) * 0.5 * setax
_earned = max(0., e00200 + _sey - c03260)
_earned_p = max(0., e00200p + sey_p - 0.5 * (setax_ss_p + setax_mc_p))
_earned_s = max(0., e00200s + sey_s - 0.5 * (setax_ss_s + setax_mc_s))

_earned_p = max(0., (e00200p + sey_p -
(1. - ALD_SelfEmploymentTax_HC) * 0.5 * setax_p))
_earned_s = max(0., (e00200s + sey_s -
(1. - ALD_SelfEmploymentTax_HC) * 0.5 * setax_s))
return (_sey, _payrolltax, ptax_was, setax, c03260,
_earned, _earned_p, _earned_s)

Expand Down Expand Up @@ -93,9 +96,9 @@ def DependentCare(nu13, elderly_dependent, _earned,
"""

if _earned <= ALD_Dependents_thd[MARS - 1]:
care_deduction = (((1 - ALD_Dependents_HC) * nu13 *
care_deduction = (((1. - ALD_Dependents_HC) * nu13 *
ALD_Dependents_Child_c) +
((1 - ALD_Dependents_HC) * elderly_dependent *
((1. - ALD_Dependents_HC) * elderly_dependent *
ALD_Dependents_Elder_c))
else:
care_deduction = 0.
Expand All @@ -105,8 +108,8 @@ def DependentCare(nu13, elderly_dependent, _earned,
@iterate_jit(nopython=True)
def Adj(e03150, e03210, c03260,
e03270, e03300, e03400, e03500,
e03220, e03230, e03240, e03290, care_deduction, ALD_StudentLoan_HC,
ALD_SelfEmploymentTax_HC, ALD_SelfEmp_HealthIns_HC, ALD_KEOGH_SEP_HC,
e03220, e03230, e03240, e03290, care_deduction,
ALD_StudentLoan_HC, ALD_SelfEmp_HealthIns_HC, ALD_KEOGH_SEP_HC,
ALD_EarlyWithdraw_HC, ALD_Alimony_HC,
c02900):
"""
Expand All @@ -125,7 +128,7 @@ def Adj(e03150, e03210, c03260,

e03240 : Domestic Production Activity Deduction

c03260 : Self employed payroll tax deduction
c03260 : Self-employed tax AGI deduction (after haircut)

e03270 : Self employed health insurance deduction

Expand All @@ -142,8 +145,6 @@ def Adj(e03150, e03210, c03260,
Tax law parameters:
ALD_StudentLoan_HC : Deduction for student loan interest haircut

ALD_SelfEmploymentTax_HC : Deduction for self-employment tax haircut

ALD_SelfEmp_HealthIns_HC :
Deduction for self employed health insurance haircut

Expand All @@ -161,12 +162,12 @@ def Adj(e03150, e03210, c03260,
# Form 2555 foreign earned income deduction is always zero
# Form 1040 adjustments
c02900 = (e03150 +
(1 - ALD_StudentLoan_HC) * e03210 +
(1 - ALD_SelfEmploymentTax_HC) * c03260 +
(1 - ALD_SelfEmp_HealthIns_HC) * e03270 +
(1 - ALD_KEOGH_SEP_HC) * e03300 +
(1 - ALD_EarlyWithdraw_HC) * e03400 +
(1 - ALD_Alimony_HC) * e03500 +
(1. - ALD_StudentLoan_HC) * e03210 +
c03260 +
(1. - ALD_SelfEmp_HealthIns_HC) * e03270 +
(1. - ALD_KEOGH_SEP_HC) * e03300 +
(1. - ALD_EarlyWithdraw_HC) * e03400 +
(1. - ALD_Alimony_HC) * e03500 +
e03220 + e03230 + e03240 + e03290 + care_deduction)
return c02900

Expand All @@ -186,11 +187,11 @@ def CapGains(p23250, p22250, _sep, ALD_Investment_ec, ALD_StudentLoan_HC,
c01000 = max((-3000. / _sep), c23650)
# compute ymod* variables
ymod1 = (e00200 + e00700 + e00800 + e00900 + e01400 + e01700 +
(1 - ALD_Investment_ec) * (e00300 + e00600 +
c01000 + e01100 + e01200) +
(1. - ALD_Investment_ec) * (e00300 + e00600 +
c01000 + e01100 + e01200) +
e02000 + e02100 + e02300)
ymod2 = e00400 + (0.50 * e02400) - c02900
ymod3 = (1 - ALD_StudentLoan_HC) * e03210 + e03230 + e03240
ymod3 = (1. - ALD_StudentLoan_HC) * e03210 + e03230 + e03240
ymod = ymod1 + ymod2 + ymod3
return (c01000, c23650, ymod, ymod1)

Expand Down Expand Up @@ -1064,7 +1065,6 @@ def NonrefundableCredits(c05800, e07240, e07260, e07300, e07400,
@iterate_jit(nopython=True)
def AdditionalCTC(n24, prectc, _earned, c07220, ptax_was,
ACTC_Income_thd, ACTC_rt, ACTC_ChildNum,
ALD_SelfEmploymentTax_HC,
c03260, e09800, c59660, e11200, c11070):
"""
AdditionalCTC function calculates Additional (refundable) Child Tax Credit
Expand Down Expand Up @@ -1095,7 +1095,7 @@ def AdditionalCTC(n24, prectc, _earned, c07220, ptax_was,
# Part II of 2005 Form 8812
if n24 >= ACTC_ChildNum and c82890 < c82935:
c82900 = 0.5 * ptax_was
c82905 = (1. - ALD_SelfEmploymentTax_HC) * c03260 + e09800
c82905 = c03260 + e09800
c82910 = c82900 + c82905
c82915 = c59660 + e11200
c82920 = max(0., c82910 - c82915)
Expand Down Expand Up @@ -1321,7 +1321,8 @@ def FairShareTax(c00100, MARS, ptax_was, setax, ptax_amc,


@iterate_jit(nopython=True)
def ExpandIncome(ptax_was, e02400, c02500, c00100, e00400, _expanded_income):
def ExpandIncome(ptax_was, c03260, e02400, c02500, c00100, e00400,
_expanded_income):
"""
ExpandIncome function: calculates and returns _expanded_income.

Expand All @@ -1331,6 +1332,7 @@ def ExpandIncome(ptax_was, e02400, c02500, c00100, e00400, _expanded_income):
employer_share = 0.5 * ptax_was # share of payroll tax on wages & salary
non_taxable_ss_benefits = e02400 - c02500
_expanded_income = (c00100 + # adjusted gross income
c03260 + # "employer share" of setax
e00400 + # non-taxable interest income
non_taxable_ss_benefits +
employer_share)
Expand Down