Closed martinholmer closed 6 months ago
Thank you I think this makes sense.
Just a note- after reweighting I get the final 2021 parameter to be 35.7%
(base) nikhil@192 tax-microdata-benchmarking % python tax_microdata_benchmarking/adjust_qbi.py
Creating CPS flat file for 2021
Creating PUF flat file for 2021
Adding Tax-Calculator outputs to the flat file for 2021
Reweighting the flat file for 2021
100%|█████████████████████████████████████████████████████████████████████████████| 10000/10000 [00:35<00:00, 281.86it/s]
Adding pass-through W2 wages to the flat file for 2021
scale: 0.0, deviation: -119.95162997484529, total: 95.9639632454937
scale: 2.0, deviation: 17.740212985602568, total: 233.65580620594156
scale: 1.0, deviation: 15.213033483977682, total: 231.12862670431667
scale: 0.5, deviation: 12.285153087418735, total: 228.20074630775773
scale: 0.25, deviation: -34.98332830899048, total: 180.9322649113485
scale: 0.375, deviation: 4.900314132936614, total: 220.8159073532756
scale: 0.3125, deviation: -14.195999745480918, total: 201.71959347485807
scale: 0.34375, deviation: -4.246802492497579, total: 211.6687907278414
scale: 0.359375, deviation: 0.4545361736741711, total: 216.37012939401316
scale: 0.3515625, deviation: -1.869013698429228, total: 214.04657952190976
scale: 0.35546875, deviation: -0.7001493964534973, total: 215.2154438238855
scale: 0.357421875, deviation: -0.12094591835099777, total: 215.794647301988
Final scale: 35.7%
Recent code revisions have incorporated this variable imputation.
As discussed in our recent conference call, we need to add values for the Tax-Calculator
PT_binc_w2_wages
input variable to each Phase 2 data file that we create. I have tried a simple imputation approach using the 2011 PUF data file produced in thetaxdata
repository. I will describe what I've done and then suggest a way to do the imputation as part of the mainstream data file creation process.Following the suggestion made by @nikhilwoodruff, I assumed the value of the imputed variable is a simple linear function of qualified business income (
qbi
):where
w2wages
isPT_binc_w2_wages
andscale
is a calibrated real number andUsing this imputation formula, I found setting
scale
to 0.27 produced an augmentedpuf.csv
file that generated a 2023 QBID tax expenditure of $55.7 billion, which is close to the JCT estimate of $56.2 billion.It seems to me this simple imputation procedure could be easily added to the Phase 2 data generation process being developed in this repository. A constant (across years) value of
scale
would used to generate imputed values in each year. That constant value ofscale
would be set to a value that generates (using Tax-Calculator to process the resulting 2021 file) aggregate qualified business income deduction (QBID) equal to the aggregate amount in the 2021 SOI tabulations ($205.8 billion). I have no idea whether or not the distribution (across AGI categories) of QBID will be anything like what the 2021 SOI tabulation shows. It it is way off, then we will eventually need to experiment with some nonlinear imputation functions. But I suggest we put that off until Phase 3.