Personal exemption payroll tax

[econ02]

closes #1369

This allows implementation of a personal exemption to the payroll tax through as outlined in Timothy P. Carney, "The case for a payroll tax cut". The exemption amount is set by both filing status and number of kids for both Social Security and Medicaid payroll taxes. Income below the sum of the filing status and number of kids exemptions is not subject to the payroll tax rate.

The four policy parameters created are:

1. _SS_em_k : Social Security Payroll Tax Exemption by Number of Kids
2. _SS_em_f : Social Security Payroll Tax Exemption by Filing Status
3. _FICA_em_k : Medicaid Payroll Tax Exemption by Number of Kids
4. _FICA_em_f : Medicaid Payroll Tax Exemption by Filing Status

Three records variables are also created. These are:

1. ss_exemption : The total Social Security exemption (sum of filing status exemption and per kid exemption).
2. mc_exemption : Same as above, for Medicaid
3. _payrolltax_exemption : Summed differences between the income and non-exempted income. This is the total income not subject to the payroll taxes.

Notes:

• Applies to wage income and self-employment income
• Social Security and Medicaid taxes can be treated with different exemption amounts.
• The filing status and kid exemption policies are separate to accomplish the goals outlined in the post: "A single earner pays no payroll tax on his first $x. A couple gets $2x of income before they start paying payroll taxes. If you've got a husband and three kids, your first $5x of income is payroll-tax-free."

@andersonfrailey

[feenberg]

On Thu, 25 May 2017, econ02 wrote: closes #1369 This allows implementation of a personal exemption to the payroll tax through as outlined in Timothy P. Carney, "The case for a payroll tax cut". The exemption amount is set by both filing status and number of kids for both Social Security and Medicaid payroll taxes. Income below the sum of the filing status and number of kids exemptions is not subject to the payroll tax rate. The four policy parameters created are: 1. _SS_em_k : Social Security Payroll Tax Exemption by Number of Kids 2. _SS_em_f : Social Security Payroll Tax Exemption by Filing Status 3. _FICA_em_k : Medicaid Payroll Tax Exemption by Number of Kids 4. _FICA_em_f : Medicaid Payroll Tax Exemption by Filing Status Three records variables are also created. These are: 1. ss_exemption : The total Social Security exemption (sum of filing status exemption and per kid exemption). 2. mc_exemption : Same as above, for Medicaid 3. _payrolltax_exemption : Summed differences between the income and non-exempted income. This is the total income not subject to the payroll taxes. Notes: * Applies to wage income and self-employment income * Social Security and Medicaid taxes can be treated with different exemption amounts. * The filing status and kid exemption policies are separate to accomplish the goals outlined in the post: "A single earner pays no payroll tax on his first $x. A couple gets $2x of income before they start paying payroll taxes. If you've got a husband and three kids, your first $5x of income is payroll-tax-free."

OK, the exemption is applied to the sum of the husband's and wife's labor income. Note that the FICA tax is not part of the income tax, so a taxpayer might have a lot of FICA and no income tax, so unless the exemption is refundable it is not very valuable/expensive. This isn't really an exemption on the FICA, it is a credit on the income tax for FICA tax already paid. dan

…

@andersonfrailey ___________________________________________________________________________ You can view, comment on, or merge this pull request online at:   #1381 Commit Summary * Add payroll tax exemption provisions * Add payroll tax exemptions * Add payroll tax exemption variables File Changes * M taxcalc/current_law_policy.json (96) * M taxcalc/functions.py (58) * M taxcalc/records_variables.json (17) Patch Links: * https://github.com/open-source-economics/Tax-Calculator/pull/1381.patch * https://github.com/open-source-economics/Tax-Calculator/pull/1381.diff — You are receiving this because you are subscribed to this thread. Reply to this email directly, view it on GitHub, or mute the thread.[AHvQVfejUHBQaiPgJhb-bok7itTJJzWZks5r9cvGgaJpZM4NmvYF.gif]

[MattHJensen]

Medicare not Medicaid.

[econ02]

Please see #1382, which has the most recent code.