Merge pull request #158 from PSLmodels/docs

Add final data examination to online docs
PSLmodels · Jul 22, 2024 · 880fe01 · 880fe01
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diff --git a/docs/book/_toc.yml b/docs/book/_toc.yml
@@ -6,3 +6,4 @@ root: intro
 chapters:
 - file: datasets
 - file: validation
+- file: examination
diff --git a/docs/book/examination.md b/docs/book/examination.md
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+Phase 3 Data Examination Results
+================================
+
+**FINAL RESULTS AS OF 2024-07-21 (after merge of PR 155)**
+
+This project is developing a new dataset for use by income and payroll
+tax microsimulation models.  The project is progressing in several
+phases.  At the end of each phase the current dataset is used as input
+to a tax microsimulation model to generate several basic tax
+estimates for calendar years 2023 and 2026.  These estimates are
+then compared with corresponding estimates generated by federal
+agencies using their more comprehensive data.  Examining the
+differences between the estimates generated from this project's data
+and the estimates published by the federal agencies should provide
+ideas about how to improve the development of this project's dataset
+in subsequent phases.
+
+For more on the source of the federal agency estimates and on how the
+model-plus-dataset estimates are generated, see the [examination
+methods](./methods.md) document.  The model used to generate the
+following Phase 3 estimates is [Tax-Calculator
+4.2.0]((https://github.com/PSLmodels/Tax-Calculator)) (after merge of
+PR 2774 on 2024-07-21).
+
+Note that Tax-Calculator assumes 100% participation in credits (like
+CTC and EITC), while the federal agencies assume less than 100%
+participation.  The implications of the differences in credit
+participation assumptions are discussed below the following tables.
+
+<br>
+
+**CY2023 and CY2026 Payroll Tax Liability** ($ billion)<br>
+(federal employee plus employer share)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 1580.0 | 1829.9 | CBO    |
+| 1523.8 | 1767.4 | Tax-Calculator + phase 3 dataset |
+| 1489.3 | 1711.0 | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**CY2023 and CY2026 Individual Income Tax Liability** ($ billion)<br>
+(federal individual income tax)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 2512.3 | 2849.4 | CBO (probably assumes less than 100% credit participation) |
+| 2212.0 | 2786.1 | Tax-Calculator + phase 3 dataset (100% participation) |
+| 2247.9 | 2742.2 | Tax-Calculator + taxdata dataset (100% participation) |
+
+<br>
+
+**CY2023 and CY2026 CTC Tax Expenditure** ($ billion)<br>
+(from the federal child tax credit)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 122.1  | 57.6   | JCT (assumes less than 100% participation) |
+| 108.6  | 55.7   | TSY (probably assumes less than 100% participation) |
+| 129.2  | 46.8   | Tax-Calculator + phase 3 dataset (100% participation) |
+| 126.3  | 43.1   | Tax-Calculator + taxdata dataset (100% participation) |
+
+<br>
+
+**CY2023 and CY2026 EITC Tax Expenditure** ($ billion)<br>
+(from the federal earned income credit)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 71.9   | 78.0   | JCT (assumes less than 100% participation) |
+| 63.6   | 71.2   | TSY (probably assumes less than 100% participation) |
+| 75.8   | 84.8   | Tax-Calculator + phase 3 dataset (100% participation) |
+| 73.5   | 82.0   | Tax-Calculator + taxdata dataset (100% participation) |
+
+<br>
+
+**CY2023 and CY2026 SSBEN Tax Expenditure** ($ billion)<br>
+(from excluding some social security benefits from federal AGI)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 45.9   |  56.4  | JCT    |
+| 31.4   |  38.4  | TSY    |
+| 53.3   |  72.2  | Tax-Calculator + phase 3 dataset |
+| 62.7   |  89.5  | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**CY2023 and CY2026 NIIT Tax Expenditure** ($ billion)<br>
+(from the 3.8% federal surtax on investment income)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| -56.5  | -53.8  | JCT    |
+|  ----  |  ----  | TSY    |
+| -57.0  | -55.1  | Tax-Calculator + phase 3 dataset |
+| -55.8  | -52.1  | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**CY2023 and CY2026 CGQD Tax Expenditure** ($ billion)<br>
+(from taxing long-term capital gains and qualified dividends at lower federal rates)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 259.3  | 239.8  | JCT    |
+| 153.9  | 182.4  | TSY    |
+| 234.3  | 232.5  | Tax-Calculator + phase 3 dataset |
+| 217.7  | 223.6  | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**CY2023 and CY2026 QBID Tax Expenditure** ($ billion)<br>
+(from the 20% federal qualified business income deduction)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+| 56.2   |  0.0   | JCT    |
+| 50.4   |  0.0   | TSY    |
+| 55.3   |  0.0   | Tax-Calculator + phase 3 dataset |
+| 19.3   |  0.0   | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**CY2023 and CY2026 SALT Tax Expenditure** ($ billion)<br>
+(from itemized deduction of state and local income/sales/property taxes)
+| CY23 Amount | CY26 Amount | Estimate Source |
+| ---:   | ---:   | :---   |
+|  21.2  | 151.3  | JCT    |
+|  26.5  | 149.0  | TSY    |
+|  20.8  | 162.3  | Tax-Calculator + phase 3 dataset |
+|  29.4  | 185.5  | Tax-Calculator + taxdata dataset |
+
+<br>
+
+**Implication of Differing Credit Participation Assumptions**
+
+Tax-Calculator assumes that everyone eligible for a credit claims it,
+while the JCT (and presumably TSY) assumes that some who are eligible
+for a credit do not claim it.  Here is what JCT says about its credit
+tax expenditure estimates: "Internal Revenue Service (IRS) statistics
+from recent tax returns are used to develop projections of the tax
+credits, deductions, and exclusions that will be claimed (or that will
+be denied in the case of negative tax expenditures) under the
+present-law baseline.  These IRS statistics show the actual usage of
+the various tax expenditure provisions.  In the case of some tax
+expenditures, such as the earned income credit, there is evidence that
+some taxpayers are not claiming all the benefits to which they are
+entitled, while others are filing claims that exceed their
+entitlements.  The tax expenditure calculations in this report are
+based on projections of actual claims under the various tax
+provisions, not the potential tax benefits to which taxpayers are
+entitled." (Quote is from page 18 of the JCX-59-23 publication.)
+
+The only IRS credit participation rates we have found are for the
+EITC, and they almost 80% and they are tax-unit participation rates
+rather than credit amount (or dollar) participation rates.  (See this
+[IRS
+document](https://www.eitc.irs.gov/eitc-central/participation-rate-by-state/eitc-participation-rate-by-states).)
+
+Given the differing credit participation assumptions, it should be
+expected that the Tax-Calculator CTC and EITC tax expenditures are
+above the JCT estimates.  The following calculations, which
+arbitrarily assume a 95% dollar participation rate, illustrate how
+the differing 2023 estimates are not as far apart as they seem.
+
+<br>
+
+**CY2023 CTC and EITC Tax Expenditures** ($ billion)<br>
+| CY23 Amount | Estimate Source |
+| ---:   | :---                 |
+| 122.1  | CTC JCT (assumes less than 100% participation) |
+| 129.2  | CTC Tax-Calculator + phase 3 dataset (100% participation) |
+| 122.7  | CTC Tax-Calculator + phase 3 dataset (95% participation) |
+|        |                                                          |
+| 71.9   | EITC JCT (assumes less than 100% participation) |
+| 75.8   | EITC Tax-Calculator + phase 3 dataset (100% participation) |
+| 72.0   | EITC Tax-Calculator + phase 3 dataset (95% participation) |
+
+<br>