PolicyEngine / policyengine-uk

The UK's only open-source static tax-benefit microsimulation model.
https://policyengine.github.io/policyengine-uk/
GNU Affero General Public License v3.0
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Extend capital gains distribution for lower income centiles using detail from top centiles #822

Open MaxGhenis opened 4 months ago

MaxGhenis commented 4 months ago

As an extension to https://github.com/PolicyEngine/policyengine-uk/issues/821, we should use the extra detail at the top of the capital gains distribution (p95/96/97/98/99) for income centiles of 90+, to enhance the detail for centiles <90. A simple approach could be computing the ratio of each quantile to the 95th for, say, the 90th-92nd income centile, and applying that to each centile below 90. The skewed capital gains distribution and progressive tax levied on capital gains means this could help get closer to the true capital gains tax revenue estimate.