search

PSLmodels / OG-Core

An overlapping generations model framework for evaluating fiscal policies.
https://pslmodels.github.io/OG-Core/
Creative Commons Zero v1.0 Universal
65 stars 111 forks source link

Compute payroll and IIT burdens separately #429

Closed jdebacker closed 4 years ago

jdebacker commented 5 years ago

Currently, OG-USA uses tax functions to approximate marginal and effective tax rates from the IIT and payroll taxes combined. In many cases, due to government accounting it's helpful to know the revenue from each of these sources separately. This issue is to discuss the best approach to do this.

Note that there is not need to change the marginal rate functions, as the decomposition is important only for determining where revenue came from. One option would be to estimate two ETR functions -- one for the ITT and one for payroll taxes. With this, we can just modify the tax.ETR_income() function to call these two functions separately and return ETR on from IIT taxes and payroll taxes. In the model solution, we'll only care about the sum of these, but this function can then be used to compute IIT and payroll tax revenue in equilibrium.

@rickecon thoughts?

jdebacker commented 4 years ago

PR #499 addresses this by splitting out the revenue from the PIT and payroll taxes according to the split found in the microsimulation model. This has some approximation error, but adds no computational complexity.