Merge pull request #2094 from martinholmer/add-ebitc-param

Add _EITC_basic_frac policy parameter

RELEASES.md

@@ -4,6 +4,23 @@ Go [here](https://github.com/open-source-economics/Tax-Calculator/pulls?q=is%3Ap
 for a complete commit history.
 
 
+2018-10-26 Release 0.22.2
+-------------------------------------------------------------------------
+(last merged pull request is
+[#2094](https://github.com/open-source-economics/Tax-Calculator/pull/2094))
+
+**API Changes**
+- None
+
+**New Features**
+- Add _EITC_basic_frac policy parameter so that an Earned and Basic Income Tax Credit (EBITC) reform can be analyzed.
+  [[#2094](https://github.com/open-source-economics/Tax-Calculator/pull/2094)
+  by Martin Holmer]
+
+**Bug Fixes**
+- None
+
+
 2018-10-25 Release 0.22.1
 -------------------------------------------------------------------------
 (last merged pull request is

taxcalc/calcfunctions.py

@@ -1139,15 +1139,16 @@ def F2441(MARS, earned_p, earned_s, f2441, CDCC_c, e32800,
 
 
 @jit(nopython=True)
-def EITCamount(phasein_rate, earnings, max_amount,
+def EITCamount(basic_frac, phasein_rate, earnings, max_amount,
                phaseout_start, agi, phaseout_rate):
     """
     Returns EITC amount given specified parameters.
     English parameter names are used in this function because the
     EITC formula is not available on IRS forms or in IRS instructions;
     the extensive IRS EITC look-up table does not reveal the formula.
     """
-    eitc = min(phasein_rate * earnings, max_amount)
+    eitc = min((basic_frac * max_amount +
+                (1.0 - basic_frac) * phasein_rate * earnings), max_amount)
     if earnings > phaseout_start or agi > phaseout_start:
         eitcx = max(0., (max_amount - phaseout_rate *
                          max(0., max(earnings, agi) - phaseout_start)))
@@ -1160,7 +1161,7 @@ def EITC(MARS, DSI, EIC, c00100, e00300, e00400, e00600, c01000,
          e27200, age_head, age_spouse, earned, earned_p, earned_s,
          EITC_ps, EITC_MinEligAge, EITC_MaxEligAge, EITC_ps_MarriedJ,
          EITC_rt, EITC_c, EITC_prt, EITC_InvestIncome_c, EITC_indiv,
-         c59660):
+         EITC_basic_frac, c59660):
     """
     Computes EITC amount, c59660.
     """
@@ -1175,7 +1176,8 @@ def EITC(MARS, DSI, EIC, c00100, e00300, e00400, e00600, c01000,
             po_start = EITC_ps[EIC]
             if MARS == 2:
                 po_start += EITC_ps_MarriedJ[EIC]
-            eitc = EITCamount(EITC_rt[EIC], earned, EITC_c[EIC],
+            eitc = EITCamount(EITC_basic_frac,
+                              EITC_rt[EIC], earned, EITC_c[EIC],
                               po_start, c00100, EITC_prt[EIC])
             if EIC == 0:
                 # enforce age eligibility rule for those with no EITC-eligible
@@ -1204,11 +1206,13 @@ def EITC(MARS, DSI, EIC, c00100, e00300, e00400, e00600, c01000,
     else:
         # individual EITC rather than a filing-unit EITC
         # .. calculate eitc amount for taxpayer
-        eitc_p = EITCamount(EITC_rt[EIC], earned_p, EITC_c[EIC],
+        eitc_p = EITCamount(EITC_basic_frac,
+                            EITC_rt[EIC], earned_p, EITC_c[EIC],
                             EITC_ps[EIC], earned_p, EITC_prt[EIC])
         # .. calculate eitc amount for spouse
         if MARS == 2:
-            eitc_s = EITCamount(EITC_rt[EIC], earned_s, EITC_c[EIC],
+            eitc_s = EITCamount(EITC_basic_frac,
+                                EITC_rt[EIC], earned_s, EITC_c[EIC],
                                 EITC_ps[EIC], earned_s, EITC_prt[EIC])
         else:
             eitc_s = 0.

taxcalc/policy_current_law.json

@@ -5428,6 +5428,38 @@
         "compatible_data": {"puf": true, "cps": true}
     },
 
+    "_EITC_basic_frac": {
+        "long_name": "Fraction of maximum earned income credit paid at zero earnings",
+        "description": "This fraction of _EITC_c is always paid as a credit and one minus this fraction is applied to the phasein rate, _EITC_rt.  This fraction is zero under current law.",
+        "section_1": "Refundable Credits",
+        "section_2": "Earned Income Tax Credit",
+        "irs_ref": "Form 1040, line 66a&b, instruction (table).",
+        "notes": "",
+        "row_var": "FLPDYR",
+        "row_label": ["2013",
+                      "2014",
+                      "2015",
+                      "2016",
+                      "2017"],
+        "start_year": 2013,
+        "cpi_inflatable": false,
+        "cpi_inflated": false,
+        "col_var": "",
+        "col_label": "",
+        "boolean_value": false,
+        "integer_value": false,
+        "value": [0.0,
+                  0.0,
+                  0.0,
+                  0.0,
+                  0.0],
+        "range": {"min": 0.0, "max": 1.0},
+        "out_of_range_minmsg": "",
+        "out_of_range_maxmsg": "",
+        "out_of_range_action": "stop",
+        "compatible_data": {"puf": true, "cps": true}
+    },
+
     "_EITC_prt": {
         "long_name": "Earned income credit phaseout rate",
         "description": "Earned income credit begins to decrease at the this rate when AGI is higher than earned income credit phaseout start AGI.",

taxcalc/tests/reforms.json

@@ -702,5 +702,15 @@
       "output_type": "iitax",
       "compare_with": {},
       "expected": "Tax-Calculator,-5.0,-5.3,-5.6,-5.9"
+  },
+
+  "64": {
+      "baseline": "2017_law.json",
+      "start_year": 2019,
+      "value": {"_EITC_basic_frac": [0.5]},
+      "name": "Add EITC basic credit equal to half the maximum credit with half the phasein rate (as described in Tax-Calculator issue 2092)",
+      "output_type": "iitax",
+      "compare_with": {},
+      "expected": "Tax-Calculator,-6.4,-6.6,-6.9,-7.1"
   }
 }

taxcalc/tests/test_reforms.py

@@ -199,7 +199,7 @@ def fixture_reforms_dict(tests_path):
     return json.loads(rjson)
 
 
-NUM_REFORMS = 63
+NUM_REFORMS = 64
 
 
 @pytest.mark.requires_pufcsv