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PolicyEngine / policyengine-us

The PolicyEngine US Python package contains a rules engine of the US tax-benefit system, and microdata generation for microsimulation analysis.
https://policyengine.org/us
GNU Affero General Public License v3.0
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MTRs for filer with employment and self-employment income differ from taxcalc #670

Open MaxGhenis opened 2 years ago

MaxGhenis commented 2 years ago

Setting self-employment income to $100k in PolicyEngine US shows this MTR graph, hitting 57% around $195k employment income ($295k total income).

image

This differs from taxcalc; in https://compute.studio/PSLmodels/Tax-Cruncher/874 I entered $100k for business income and got this graph. That 57% MTR shows up around $95k earnings (which I assume means wages).

image

There might be some definitional reasons for these to diverge, but maybe also some implementation issues.

MaxGhenis commented 2 years ago

This is probably due to a combination of https://github.com/PolicyEngine/policyengine/issues/648 and #671.

martinholmer commented 2 years ago

The differences in marginal tax rates on wage income in the presence of self-employment income discussed in issue #670 is caused (at least in part) by the fact that Tax-Calculator and OpenFisca-US tax self-employment income differently, mostly due to differences in the qualified business income deduction.