[WIP] Distributing the Corporate Income Tax

CorpIncTest.py

@@ -0,0 +1,56 @@
+"""
+Testing file for calculate.py
+"""
+
+from pandas import DataFrame, concat
+from taxcalc.calculate import *
+from taxcalc.functions import *
+from taxcalc.records import *
+from taxcalc.parameters import *
+import taxcalc.parameters as parameters
+import numpy as np
+#from timer.timed_calculate import *
+
+
+def to_csv(fname, df):
+    """
+    Save this dataframe to a CSV file with name 'fname' and containing
+    a header with the column names of the dataframe.
+    """
+    df.to_csv(fname, float_format= '%1.3f', sep=',', header=True, index=False)
+
+
+
+def run(puf=True):
+    """
+    Run each function defined in calculate.py, saving the ouput to a CSV file.
+    'puf' set to True by default, to use the 'puf2.csv' as an input
+
+    For functions returning an additional non-global variable in addition
+    to the DataFrame to be printed, one line saves the dataFrame to be printed 
+    first, and then saves the variable to be used by a following function second. 
+    """
+
+    # Create a Parameters object
+    params = Parameters()
+
+    # Create a Public Use File object
+
+    tax_dta = pd.read_csv("puf.csv")
+
+    blowup_factors = "./taxcalc/StageIFactors.csv"
+    weights = "./taxcalc/WEIGHTS.csv"
+
+    puf = Records(tax_dta, blowup_factors, weights)
+
+    # Create a Calculator
+    calc = Calculator(parameters=params, records=puf)
+    # Dist_Corp_Inc_Tax(calc.params, calc.records)
+
+    calc.corp_inc_tax()
+
+    create_corpinctax_table(calc, "weighted_deciles", "weighted_sum")
+
+
+if __name__ == '__main__':
+    run()

docs/proposed_features/DistributingCorpIncTax.rst

@@ -9,9 +9,9 @@ The OSPC Tax-Calculator distributes the corporate income tax to individuals, bot
 
 The way OSPC accounts for the share of the corporate income tax borne by labor is first to calculate each individual’s compensation share. This is done by summing the individual’s wages, benefits given by the employer, and the untaxed voluntary contribution to his/her retirement plans[2]_ and dividing it by the aggregate compensation[3]_ people earn in the economy. Next, this compensation share is multiplied by the percent borne by labor and multiplied again by the aggregate revenue from the corporate income tax[4]_.  
 
-The way OSPC accounts for the share of the corporate income tax borne by supernormal returns to capital is to take the percentage given to distribute to supernormal returns multiplied by the aggregate revenue collected from the tax multiplied by the sum of the individual’s share of the total of dividends in the market times 0.6 and the individual’s share of the capital gains in the market times 0.6[5]_. This value is then divided by 1.2 (the sum of the .6's), so as not to inflate this value from the multplication of the .6's.
+The way OSPC accounts for the share of the corporate income tax borne by supernormal returns to capital is to take the percentage given to distribute to supernormal returns multiplied by the aggregate revenue collected from the tax multiplied by the individual’s supernormal returns divided by the total supernormal returns in the economy. OSPC defines supernormal returns as 60% of net capital gains and 60% of dividends[5]_.
 
-The way OSPC accounts for the share of the corporate income tax borne by normal returns to capital is by taking the percent given to distribute to normal returns multiplied by the aggregate revenue collected from the tax multiplied by the sum of the individual’s share of the total dividends in the domestic market times 0.4 and the individual’s share of the capital gains in the domestic market times 0.4 and the individual’s share of self-employment and pass-through income times 0.4 and the individual’s share of the bonds in the domestic market[6]_. This value is then divided by 2.2 (the sum of the .4's and 1), so as not to inflate this value.
+The way OSPC accounts for the share of the corporate income tax borne by normal returns to capital is by taking the percent given to distribute to normal returns multiplied by the aggregate revenue collected from the tax multiplied by the individual’s normal returns divided by the total supernormal returns in the economy. OSPC defines the normal returns as 40% of net capital gains, 40% of dividends, 40% of self-employed and pass-through income, and 100% of bond ownership[6]_. 
 
 OSPC’s model for labor is limited by lack of information regarding payroll taxes and benefits given by an individual’s employer. Currently, OSPC uses the sum of wages, employer provided benefit for dependent care, Archer MSA, and retirement savings contribution credit to determine an individual’s compensation, but this leaves many other factors out, such as employer’s contribution to health insurance and other contributions to retirement plans[7]_.  Limitations on share to capital come from OSPC’s lack of data regarding IRA holdings, 401(k) account ownership, and other self-employment and pass-through income. 
 
@@ -32,3 +32,13 @@ Say the United States collects $100 in corporate tax revenue one year and person
 ..[6]Discernment between assets that have a certain percentage from normal returns and supernormal returns was adapted from the Tax Policy Center.
 
 ..[7]This measure is modeled after that done by the JCT. Calculated in the method Dist_Corp_Inc_Tax in functions.py
+
+Bibliography
+------------
+Edward Harris. 2012. “The Distribution of Household Income and Federal Taxes, 2008 and 2009.” Edited by Sherry Snyder. Congressional Budget Office.http://www.cbo.gov/sites/default/files/cbofiles/attachments/43373-AverageTaxRates_screen.pdf.
+
+Jim Nunns. 2012. “How TPC Distributes the Corporate Income Tax.” Tax Policy Center. http://www.taxpolicycenter.org/UploadedPDF/412651-Tax-Model-Corporate-Tax-Incidence.pdf.
+
+Julie-Anne Cronin, Emily Y. Lin, Laura Power, and Michael Cooper. 2012. “Distributing the Corporate Income Tax: Revised U.S. Treasury Methodology.” The Department of the Treasury.http://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/OTA-T2012-05-Distributing-the-Corporate-Income-Tax-Methodology-May-2012.pdf.
+
+The Staff of the Joint Committee on Taxation. 2013. “Modeling the Distribution of Taxes on Business Income.” The Joint Committee on Taxation. https://www.jct.gov/publications.html?func=showdown&id=4528.

taxcalc/calculate.py

@@ -102,6 +102,8 @@ def __init__(self, params=None, records=None, sync_years=True, **kwargs):
             print("Your data have beeen extrapolated to "
                   + str(self._records.current_year) + ".")
 
+        self.corp_inc_tax()
+
         assert self._params.current_year == self._records.current_year
 
     @property
@@ -142,6 +144,7 @@ def calc_all(self):
         C1040(self.params, self.records)
         DEITC(self.params, self.records)
         OSPC_TAX(self.params, self.records)
+        self.corp_inc_tax()
         ExpandIncome(self.params, self.records)
 
     def calc_all_test(self):
@@ -175,6 +178,7 @@ def calc_all_test(self):
         add_df(all_dfs, C1040(self.params, self.records))
         add_df(all_dfs, DEITC(self.params, self.records))
         add_df(all_dfs, OSPC_TAX(self.params, self.records))
+        self.corp_inc_tax()
         add_df(all_dfs, ExpandIncome(self.params, self.records))
         totaldf = pd.concat(all_dfs, axis=1)
         return totaldf
@@ -183,10 +187,65 @@ def increment_year(self):
         self.records.increment_year()
         self.params.increment_year()
 
+        """
+        TODO: Corporate Income Tax
+
+        Change the json parameters for percent_labor, etc.
+        For example, percent_labor is given to be 25%, but it is a long
+        term affect for labor to bear the buren of this tax, so year 1
+        it should be 0 percent and then smoothly transition to 25 percent
+        over the 10-year budget window
+        """
+
     @property
     def current_year(self):
         return self.params.current_year
 
+    def corp_inc_tax(self):
+        """
+        Calculates the aggregate dividends, capital gains, bonds, self-employed
+        income, and compensation for this calculator's Records attribute
+        Once calculated, uses these values to determine this caclulator's
+        Records's shares of the corporate income tax burden
+        """
+
+        self.records.agg_self_employed_and_pt = (self.records.e_and_p * self.records.s006).sum()
+
+        self.records.agg_bonds = (self.records.bonds * self.records.s006).sum()
+
+        self.records.agg_comp = (self.records.compensation * self.records.s006).sum()
+
+        self.records.agg_capgains = (self.records.netcapgains * self.records.s006).sum()
+
+        self.records.agg_dividends = (self.records.dividends * self.records.s006).sum()
+
+        self.records.agg_normal = ((self.records.dividends * self.records.s006).sum() * .4
+                                    + (self.records.netcapgains * self.records.s006).sum() * .4
+                                    + (self.records.e_and_p * self.records.s006).sum() * .4
+                                    + (self.records.bonds * self.records.s006).sum())
+
+        self.records.agg_supernormal = ((self.records.netcapgains * self.records.s006).sum() * .6
+                                        + (self.records.dividends * self.records.s006).sum() * .6)
+
+        myfunc = np.vectorize(Dist_Corp_Inc_Tax)
+
+        revenue_collected = 1000000000000.
+        percent_labor = .2
+        percent_supernormal = .6
+        percent_normal = .2
+
+        self.records.share_corptax_burden = myfunc(revenue_collected,
+                percent_labor, percent_supernormal,
+                percent_normal, self.records.agg_comp, self.records.agg_dividends,
+                self.records.agg_capgains, self.records.agg_bonds,
+                self.records.agg_self_employed_and_pt, self.records.agg_normal,
+                self.records.normal, self.records.agg_supernormal,
+                self.records.share_corptax_burden, self.records.supernormal,
+                self.records.dividends, self.records.e_and_p,
+                self.records.netcapgains, self.records.bonds,
+                self.records.compensation)
+
+
     def mtr(self, income_type_string, diff=100):
         """
         This method calculates the marginal tax rate for every record.

taxcalc/functions.py

@@ -324,6 +324,9 @@ def ItemDed(_posagi, e17500, e18400, e18425, e18450, e18500, e18800, e18900,
 def EI_FICA(   e00900, e02100, SS_Earnings_c, e00200,
                     e11055, e00250, e30100, FICA_ss_trt, FICA_mc_trt):
     # Earned Income and FICA #
+
+    # employer_share_fica = (max(0, FICA_ss_trt * min(SS_Earnings_c, e00200)
+    #                        + FICA_mc_trt * e00200))
 
     _sey = e00900 + e02100
     _fica_ss = max(0, FICA_ss_trt * min(SS_Earnings_c, e00200
@@ -580,6 +583,7 @@ def TaxGains(e00650, c04800, e01000, c23650, e23250, e01100, e58990,
     else:
         _hasgain = 0.
 
+
     if _hasgain == 1.:
         #if/else 1
         _dwks5 = max(0., e58990 - e58980)
@@ -1402,9 +1406,41 @@ def RefAmOpp(_cmp, c87521, _num, c00100, EDCRAGE, c87668):
 def NonEdCr(c87550, MARS, ETC_pe_Married, c00100, _num,
     c07180, e07200, c07230, e07240, e07960, e07260, e07300,
     e07700, e07250, t07950, c05800, _precrd, ETC_pe_Single, _xlin3, _xlin6, c87668, c87620):
+    """
+    Nonrefundable Education Credits
+    Form 8863 Tentative Education Credits
+
+    Notes
+    -----
+    Tax Law Parameters:
+
+        e07180 : Child Care Credit
+
+        e07200 : Credit for Elderly or Disabled
+
+        e07240 : Retirement Savings Contribution Credit
+
+        e07960 : Qualified Electric Vehicle Credit
+
+        e07260 : Residential Energy Credit
+
+        e07300 : Foreign Tax Credit
+
+        e07700 : Mortgage Int. Credit
+
+        e07250 : Adoption Credit Amt.
+
+    Intermediate Variables:
+
+        _num : filing status, number of people filing jointly
+
+        c87668 : nonrefundable Education Credit
+
+    Returns
+    -------
+
+    """
 
-    # Nonrefundable Education Credits
-    # Form 8863 Tentative Education Credits
     c87560 = c87550
 
     # Phase Out
@@ -1689,6 +1725,54 @@ def Taxer_i(inc_in, MARS, II_rt1, II_rt2, II_rt3, II_rt4, II_rt5, II_rt6,
     return inc_out
 
 
+def Dist_Corp_Inc_Tax(revenue_collected, percent_labor, percent_supernormal,
+                      percent_normal, agg_comp, agg_dividends, agg_capgains,
+                      agg_bonds, agg_self_employed_and_pt, agg_normal, normal,
+                      agg_supernormal, share_corptax_burden, supernormal,
+                      dividends, e_and_p, netcapgains, bonds, compensation):
+    """
+    This function calculates the burden of the corporate income tax borne
+    by an individual in the economy. It also incorporates this burden into
+    our measure of the individual's expanded income.
+
+    Parameters
+    ----------
+    revenue_collected : float
+        value of yearly revenue estimated to be collected in aggregate from the
+        corporate income tax assigned by the user
+    percent_labor : float
+        percent of the burden that will be borne by labor
+    percent_normal : float
+        percent of the burden that will be borne by normal returns
+    percent_supernormal : float
+        percent of the burden that will be borne by supernormal returns
+
+    Returns
+    -------
+    share_corptax_burden : float
+        individual's share of the corporate income tax
+    """
+
+    # adapted from the JCT
+    share_from_labor = (percent_labor * revenue_collected *
+                        compensation / agg_comp)
+
+    # adapted from the JCT and TPC
+    share_from_normal = (percent_normal * revenue_collected
+                         * normal / agg_normal)
+
+    share_from_supernormal = (percent_supernormal * revenue_collected
+                              * supernormal / agg_supernormal)
+
+    # individual's share of the corporate income tax
+    share_corptax_burden = share_from_labor + share_from_normal + share_from_supernormal
+
+    # incorporating the burden into our measure of expanded income
+    # expanded_income = expanded_income + corp_tax_burden
+
+    return share_corptax_burden
+
+
 @iterate_jit(nopython=True, parameters=['FICA_ss_trt', 'SS_Earnings_c', 
                                         'FICA_mc_trt'])
 def ExpandIncome(FICA_ss_trt, SS_Earnings_c, e00200, FICA_mc_trt, e02400, 
@@ -1706,4 +1790,3 @@ def ExpandIncome(FICA_ss_trt, SS_Earnings_c, e00200, FICA_mc_trt, e02400,
 
 
     return (_expanded_income)
-

taxcalc/params.json

@@ -1113,7 +1113,7 @@
     },
     "_CG_rt1":{
         "long_name": "Long term capital gain and qualified dividends rate 1",
-	"description": "",
+	    "description": "",
         "start_year": 2013,
         "col_var": "",
         "row_var": "",
@@ -1146,7 +1146,7 @@
         "col_label": "",
         "value": [0.20] 
     },
-        "_CG_thd1":{
+    "_CG_thd1":{
         "long_name": "Long term capital gain and qualified dividends threshold 1",
 	    "description": "",
         "start_year": 2013,
@@ -1208,7 +1208,7 @@
         "col_label": "",
         "value": [0.20] 
     },
-        "_AMT_CG_thd1":{
+    "_AMT_CG_thd1":{
         "long_name": "Long term capital gain and qualified dividend threshold 1",
 	    "description": "",
         "start_year": 2013,
@@ -1233,5 +1233,49 @@
         "value": [  [400000, 450000, 225000, 425000, 450000, 225000],
                     [406750, 457600, 228800, 432200, 457600, 228800],
                     [413200, 464850, 223425, 439000, 464850, 223425]]
+    }, 
+        "revenue_collected":{
+        "long_name": "Yearly Revnue Collected by the Corporate Income Tax",
+	    "description": "",
+        "start_year": 2013,
+        "col_var": "",
+        "row_var": "",
+        "row_label": "",
+        "cpi_inflated": false,
+        "col_label": "",
+        "value": [20000]
+    },
+    "percent_labor":{
+        "long_name": "Percent of the Corporate Income Tax allocated to Labor",
+	    "description": "",
+        "start_year": 2013,
+        "col_var": "",
+        "row_var": "",
+        "row_label": "",
+        "cpi_inflated": false,
+        "col_label": "",
+        "value": [0.20]
+    },
+    "percent_supernormal":{
+        "long_name": "Percent of the Corporate Income Tax allocated to Supernormal Returns",
+	    "description": "",
+        "start_year": 2013,
+        "col_var": "",
+        "row_var": "",
+        "row_label": "",
+        "cpi_inflated": false,
+        "col_label": "",
+        "value": [0.60]
+    },
+    "percent_normal":{
+        "long_name": "Percent of the Corporate Income Tax allocated to Normal Returns",
+	    "description": "",
+        "start_year": 2013,
+        "col_var": "",
+        "row_var": "",
+        "row_label": "",
+        "cpi_inflated": false,
+        "col_label": "",
+        "value": [0.20]
     }
 }