diff --git a/ccc/get_taxcalc_rates.py b/ccc/get_taxcalc_rates.py index df22448d..f464cd48 100644 --- a/ccc/get_taxcalc_rates.py +++ b/ccc/get_taxcalc_rates.py @@ -7,6 +7,7 @@ def get_calculator( baseline, calculator_start_year, + baseline_policy=None, reform=None, data="cps", gfactors=None, @@ -19,6 +20,7 @@ def get_calculator( Args: baseline (bool): `True` if baseline tax policy calculator_start_year (integer): first year of budget window + baseline_policy (dictionary): IIT baseline parameters reform (dictionary): IIT reform parameters data (string or Pandas DataFrame): path to file or DataFrame for Tax-Calculator Records object (optional) @@ -52,10 +54,14 @@ def get_calculator( records1 = Records() # pragma: no cover if baseline: - # Should not be a reform if baseline is True - assert not reform + if ( + baseline_policy + ): # if something other than current law policy baseline + update_policy(policy1, baseline_policy) if not baseline: + if baseline_policy: # update baseline policy to layer reform on top + update_policy(policy1, baseline_policy) update_policy(policy1, reform) # the default set up increments year to 2013 @@ -73,7 +79,11 @@ def get_calculator( def get_rates( - baseline=False, start_year=DEFAULT_START_YEAR, reform={}, data="cps" + baseline=False, + start_year=DEFAULT_START_YEAR, + baseline_policy=None, + reform={}, + data="cps", ): """ This function computes weighted average marginal tax rates using @@ -92,6 +102,7 @@ def get_rates( calc1 = get_calculator( baseline=baseline, calculator_start_year=start_year, + baseline_policy=baseline_policy, reform=reform, data=data, ) diff --git a/ccc/parameters.py b/ccc/parameters.py index e8495460..2851c478 100644 --- a/ccc/parameters.py +++ b/ccc/parameters.py @@ -26,6 +26,7 @@ def __init__( baseline=False, year=DEFAULT_START_YEAR, call_tc=False, + baseline_policy=None, iit_reform={}, data="cps", ): @@ -34,6 +35,7 @@ def __init__( self.test = test self.baseline = baseline self.year = year + self.baseline_policy = baseline_policy self.iit_reform = iit_reform self.data = data # initialize parameter values from JSON @@ -55,7 +57,11 @@ def ccc_initialize(self, call_tc=False): if call_tc: # Find individual income tax rates from Tax-Calculator indiv_rates = get_rates( - self.baseline, self.year, self.iit_reform, self.data + self.baseline, + self.year, + self.baseline_policy, + self.iit_reform, + self.data, ) self.tau_pt = indiv_rates["tau_pt"] self.tau_div = indiv_rates["tau_div"] diff --git a/ccc/tcja_extension.json b/ccc/tcja_extension.json new file mode 100644 index 00000000..32cf24dc --- /dev/null +++ b/ccc/tcja_extension.json @@ -0,0 +1,276 @@ +{ + "BonusDeprec_3yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "BonusDeprec_5yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "BonusDeprec_7yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "BonusDeprec_10yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "BonusDeprec_15yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "BonusDeprec_20yr": [ + { + "year": 2026, + "value": 0.4 + } + ], + "tau_pt": [ + { + "year": 2026, + "value": 0.20167244909882368 + }, + { + "year": 2027, + "value": 0.20348817617368892 + }, + { + "year": 2028, + "value": 0.20439272346443807 + }, + { + "year": 2029, + "value": 0.20308698621629706 + }, + { + "year": 2030, + "value": 0.2035939509415052 + }, + { + "year": 2031, + "value": 0.20240046451418342 + }, + { + "year": 2032, + "value": 0.2012693740494531 + }, + { + "year": 2033, + "value": 0.2006450797882713 + } + ], + "tau_div": [ + { + "year": 2026, + "value": 0.17318090272505438 + }, + { + "year": 2027, + "value": 0.17432284289770666 + }, + { + "year": 2028, + "value": 0.17282374074928825 + }, + { + "year": 2029, + "value": 0.17340175754076134 + }, + { + "year": 2030, + "value": 0.17422447893073145 + }, + { + "year": 2031, + "value": 0.17454968182589295 + }, + { + "year": 2032, + "value": 0.1740630397322921 + }, + { + "year": 2033, + "value": 0.17390183556629837 + } + ], + "tau_int": [ + { + "year": 2026, + "value": 0.3128559611626518 + }, + { + "year": 2027, + "value": 0.3139006325469027 + }, + { + "year": 2028, + "value": 0.31232532045301753 + }, + { + "year": 2029, + "value": 0.31278491973780054 + }, + { + "year": 2030, + "value": 0.3133435092632634 + }, + { + "year": 2031, + "value": 0.31314414677255953 + }, + { + "year": 2032, + "value": 0.31327752215037974 + }, + { + "year": 2033, + "value": 0.3129790702889989 + } + ], + "tau_scg": [ + { + "year": 2026, + "value": 0.28336133996697926 + }, + { + "year": 2027, + "value": 0.2833684122562315 + }, + { + "year": 2028, + "value": 0.2828407445954024 + }, + { + "year": 2029, + "value": 0.2840791423502338 + }, + { + "year": 2030, + "value": 0.2845544888165263 + }, + { + "year": 2031, + "value": 0.28481607001900205 + }, + { + "year": 2032, + "value": 0.2848967373063876 + }, + { + "year": 2033, + "value": 0.285277625628927 + } + ], + "tau_lcg": [ + { + "year": 2026, + "value": 0.18280630598531608 + }, + { + "year": 2027, + "value": 0.1830144476663731 + }, + { + "year": 2028, + "value": 0.1829679688634312 + }, + { + "year": 2029, + "value": 0.18388090065696877 + }, + { + "year": 2030, + "value": 0.18437947635832222 + }, + { + "year": 2031, + "value": 0.1847541804054145 + }, + { + "year": 2032, + "value": 0.1845754751225953 + }, + { + "year": 2033, + "value": 0.18508416618645537 + } + ], + "tau_td": [ + { + "year": 2026, + "value": 0.2053038317366772 + }, + { + "year": 2027, + "value": 0.20649173093016085 + }, + { + "year": 2028, + "value": 0.20768641729537382 + }, + { + "year": 2029, + "value": 0.20816493005521833 + }, + { + "year": 2030, + "value": 0.2087589110312411 + }, + { + "year": 2031, + "value": 0.20936047682363962 + }, + { + "year": 2032, + "value": 0.20872441217334245 + }, + { + "year": 2033, + "value": 0.20792201918205175 + } + ], + "tau_h": [ + { + "year": 2026, + "value": 0.03385918037116764 + }, + { + "year": 2027, + "value": 0.03376110325345599 + }, + { + "year": 2028, + "value": 0.03370990009622134 + }, + { + "year": 2029, + "value": 0.033444213400923 + }, + { + "year": 2030, + "value": 0.033168637894013954 + }, + { + "year": 2031, + "value": 0.032904420741914325 + }, + { + "year": 2032, + "value": 0.032489842789964196 + }, + { + "year": 2033, + "value": 0.03214152480222879 + } + ] +} \ No newline at end of file diff --git a/ccc/tests/test_get_taxcalc_rates.py b/ccc/tests/test_get_taxcalc_rates.py index c928328b..4645e64d 100644 --- a/ccc/tests/test_get_taxcalc_rates.py +++ b/ccc/tests/test_get_taxcalc_rates.py @@ -15,13 +15,21 @@ def test_get_calculator_cps(): @pytest.mark.needs_puf @pytest.mark.parametrize( - "data", ["puf.csv", None], ids=["data=PUF", "data=None"] + "baseline,data", + [(True, "puf.csv"), (True, None), (False, None)], + ids=["baseline,data=PUF", "baseline,data=None", "reform,data=None"], ) -def test_get_calculator(data): +def test_get_calculator(baseline, data): """ Test the get_calculator() function """ - calc1 = tc.get_calculator(True, 2019, data=data) + calc1 = tc.get_calculator( + baseline, + 2019, + baseline_policy={"FICA_ss_trt": {2018: 0.15}}, + reform={"FICA_ss_trt": {2018: 0.125}}, + data=data, + ) assert calc1.current_year == 2019 @@ -39,7 +47,11 @@ def test_get_rates(): """ p = Specification(year=2020) # has default tax rates, with should equal TC test_dict = tc.get_rates( - baseline=False, start_year=2020, reform={}, data="cps" + baseline=False, + start_year=2020, + baseline_policy={}, + reform={}, + data="cps", ) for k, v in test_dict.items(): print("Tax rate = ", k) @@ -53,7 +65,7 @@ def test_get_rates(): ) def test_is_paramtools_format(reform, expected): """ - Test get_taxcalc_rates.is_parametools_format function. + Test get_taxcalc_rates.is_paramtools_format function. """ returned_value = tc.is_paramtools_format(reform) diff --git a/docs/book/content/examples/TCJA_extension.ipynb b/docs/book/content/examples/TCJA_extension.ipynb new file mode 100644 index 00000000..77dea940 --- /dev/null +++ b/docs/book/content/examples/TCJA_extension.ipynb @@ -0,0 +1,341 @@ +{ + "cells": [ + { + "cell_type": "markdown", + "metadata": {}, + "source": [ + "# Using the Cost-of-Capital-Calculator (CCC) with an alternative baseline\n", + "\n", + "This notebook provides an illustration of using the Cost-of-Capital-Calculator (CCC) with an alternative baseline. In particular, it will simulate and compare results using a current law baseline and a current policy baseline (i.e., TCJA permanence).\n", + "\n", + "To run this notebook on your machine, you will need to follow the instructions to install CCC as described in the CCC README [here](https://github.com/PSLmodels/Cost-of-Capital-Calculator). In particular, you need to:\n", + "\n", + "* Install the [Anaconda distribution](https://www.anaconda.com/distribution/) of Python\n", + "* Install the CCC package by typing `conda install -c conda-forge ccc` (or `pip install cost-of-captial-calculator`) in the command prompt.\n", + "\n", + "Once you follow the above, you will be ready to work with this Jupyter Notebook.\n", + "\n", + "## First things first, import necessary packages" + ] + }, + { + "cell_type": "code", + "execution_count": 4, + "metadata": {}, + "outputs": [], + "source": [ + "# To install ccc package (if not already):\n", + "import sys\n", + "if 'ccc' not in sys.modules:\n", + " !pip install cost-of-capital-calculator" + ] + }, + { + "cell_type": "code", + "execution_count": 6, + "metadata": {}, + "outputs": [ + { + "data": { + "text/html": [ + " \n", + "
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"display_data" + } + ], + "source": [ + "# import packages\n", + "import pandas as pd\n", + "import numpy as np\n", + "import os\n", + "from bokeh.plotting import figure, show\n", + "from bokeh.io import output_notebook\n", + "# import CCC classes that we'll work with\n", + "from ccc.data import Assets\n", + "from ccc.parameters import Specification, DepreciationParams\n", + "from ccc.calculator import Calculator\n", + "# to print bokeh plots inline\n", + "output_notebook()" + ] + }, + { + "cell_type": "markdown", + "metadata": {}, + "source": [ + "## Create instance of the calculator class with a current law baseline" + ] + }, + { + "cell_type": "code", + "execution_count": 18, + "metadata": {}, + "outputs": [], + "source": [ + "# Create an instance of the Assets class\n", + "assets = Assets()\n", + "# Create an instance of the Specification class\n", + "p = Specification(call_tc=False, year=2026) # choose year after TCJA expires\n", + "# Create an instance of the DepreciationParams class\n", + "dp = DepreciationParams()\n", + "# Create an instance of the Calculator class\n", + "calc1 = Calculator(p, dp, assets)\n", + "calc1.calc_all()" + ] + }, + { + "cell_type": "markdown", + "metadata": {}, + "source": [ + "## Create instance of the calculator class with a current policy baseline (i.e., TCJA permanence)" + ] + }, + { + "cell_type": "code", + "execution_count": 24, + "metadata": {}, + "outputs": [ + { + "ename": "IndexError", + "evalue": "index 0 is out of bounds for axis 0 with size 0", + "output_type": "error", + "traceback": [ + "\u001b[0;31m---------------------------------------------------------------------------\u001b[0m", + "\u001b[0;31mIndexError\u001b[0m Traceback (most recent call last)", + "Cell \u001b[0;32mIn[24], line 5\u001b[0m\n\u001b[1;32m 3\u001b[0m \u001b[38;5;66;03m# Create an instance of the Specification class\u001b[39;00m\n\u001b[1;32m 4\u001b[0m p2 \u001b[38;5;241m=\u001b[39m Specification(call_tc\u001b[38;5;241m=\u001b[39m\u001b[38;5;28;01mFalse\u001b[39;00m, year\u001b[38;5;241m=\u001b[39m\u001b[38;5;241m2027\u001b[39m) \u001b[38;5;66;03m# choose year after TCJA expires\u001b[39;00m\n\u001b[0;32m----> 5\u001b[0m \u001b[43mp2\u001b[49m\u001b[38;5;241;43m.\u001b[39;49m\u001b[43mupdate_specification\u001b[49m\u001b[43m(\u001b[49m\u001b[43mos\u001b[49m\u001b[38;5;241;43m.\u001b[39;49m\u001b[43mpath\u001b[49m\u001b[38;5;241;43m.\u001b[39;49m\u001b[43mjoin\u001b[49m\u001b[43m(\u001b[49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;124;43m..\u001b[39;49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;124;43m..\u001b[39;49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;124;43m..\u001b[39;49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;124;43m..\u001b[39;49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m'\u001b[39;49m\u001b[38;5;124;43mccc\u001b[39;49m\u001b[38;5;124;43m'\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m'\u001b[39;49m\u001b[38;5;124;43mtcja_extension.json\u001b[39;49m\u001b[38;5;124;43m'\u001b[39;49m\u001b[43m)\u001b[49m\u001b[43m)\u001b[49m\n\u001b[1;32m 6\u001b[0m \u001b[38;5;66;03m# Create an instance of the DepreciationParams class\u001b[39;00m\n\u001b[1;32m 7\u001b[0m dp \u001b[38;5;241m=\u001b[39m DepreciationParams()\n", + "File \u001b[0;32m~/repos/CCC/ccc/parameters.py:245\u001b[0m, in \u001b[0;36mSpecification.update_specification\u001b[0;34m(self, revision, raise_errors)\u001b[0m\n\u001b[1;32m 243\u001b[0m \u001b[38;5;28;01mraise\u001b[39;00m \u001b[38;5;167;01mValueError\u001b[39;00m(\u001b[38;5;124m\"\u001b[39m\u001b[38;5;124mERROR: revision is not a dictionary or string\u001b[39m\u001b[38;5;124m\"\u001b[39m)\n\u001b[1;32m 244\u001b[0m \u001b[38;5;28mself\u001b[39m\u001b[38;5;241m.\u001b[39madjust(revision, raise_errors\u001b[38;5;241m=\u001b[39mraise_errors)\n\u001b[0;32m--> 245\u001b[0m \u001b[38;5;28;43mself\u001b[39;49m\u001b[38;5;241;43m.\u001b[39;49m\u001b[43mcompute_default_params\u001b[49m\u001b[43m(\u001b[49m\u001b[43m)\u001b[49m\n", + "File \u001b[0;32m~/repos/CCC/ccc/parameters.py:187\u001b[0m, in \u001b[0;36mSpecification.compute_default_params\u001b[0;34m(self)\u001b[0m\n\u001b[1;32m 185\u001b[0m \u001b[38;5;28mself\u001b[39m\u001b[38;5;241m.\u001b[39mbonus_deprec \u001b[38;5;241m=\u001b[39m {}\n\u001b[1;32m 186\u001b[0m \u001b[38;5;28;01mfor\u001b[39;00m cl \u001b[38;5;129;01min\u001b[39;00m class_list_str:\n\u001b[0;32m--> 187\u001b[0m \u001b[38;5;28mself\u001b[39m\u001b[38;5;241m.\u001b[39mbonus_deprec[cl] \u001b[38;5;241m=\u001b[39m \u001b[38;5;28;43mgetattr\u001b[39;49m\u001b[43m(\u001b[49m\n\u001b[1;32m 188\u001b[0m \u001b[43m \u001b[49m\u001b[38;5;28;43mself\u001b[39;49m\u001b[43m,\u001b[49m\u001b[43m \u001b[49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;124;43mBonusDeprec_\u001b[39;49m\u001b[38;5;132;43;01m{}\u001b[39;49;00m\u001b[38;5;124;43myr\u001b[39;49m\u001b[38;5;124;43m\"\u001b[39;49m\u001b[38;5;241;43m.\u001b[39;49m\u001b[43mformat\u001b[49m\u001b[43m(\u001b[49m\u001b[43mcl\u001b[49m\u001b[43m)\u001b[49m\n\u001b[1;32m 189\u001b[0m \u001b[43m \u001b[49m\u001b[43m)\u001b[49m\u001b[43m[\u001b[49m\u001b[38;5;241;43m0\u001b[39;49m\u001b[43m]\u001b[49m\n\u001b[1;32m 190\u001b[0m \u001b[38;5;66;03m# to handle land and inventories\u001b[39;00m\n\u001b[1;32m 191\u001b[0m \u001b[38;5;66;03m# this is fixed later, but should work on this\u001b[39;00m\n\u001b[1;32m 192\u001b[0m \u001b[38;5;28mself\u001b[39m\u001b[38;5;241m.\u001b[39mbonus_deprec[\u001b[38;5;124m\"\u001b[39m\u001b[38;5;124m100\u001b[39m\u001b[38;5;124m\"\u001b[39m] \u001b[38;5;241m=\u001b[39m \u001b[38;5;241m0.0\u001b[39m\n", + "\u001b[0;31mIndexError\u001b[0m: index 0 is out of bounds for axis 0 with size 0" + ] + } + ], + "source": [ + "# Create an instance of the Assets class\n", + "assets = Assets()\n", + "# Create an instance of the Specification class\n", + "p2 = Specification(call_tc=False, year=2026) # choose year after TCJA expires\n", + "p2.update_specification(os.path.join(\"..\", \"..\", \"..\", \"..\", 'ccc', 'tcja_extension.json'))\n", + "# Create an instance of the DepreciationParams class\n", + "dp = DepreciationParams()\n", + "# Create an instance of the Calculator class\n", + "calc2 = Calculator(p2, dp, assets)\n", + "calc2.calc_all()" + ] + }, + { + "cell_type": "markdown", + "metadata": {}, + "source": [ + "## Compare METRs under the two baselines\n", + "\n", + "Now with two `Calculator` objects named `calc1` and `calc2` (representing the current law baseline and current policy baseline), we can compare the two.\n", + "\n", + "We start with an overall summary table showing the marginal effective total tax rates (METTRs) for all investments, corporate investments, and pass-through investments under varying financing assumptions. This is done through the `summary_table` function. It takes a calculator object as an argument." + ] + }, + { + "cell_type": "code", + "execution_count": 22, + "metadata": {}, + "outputs": [ + { + "data": { + "text/html": [ + "
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Marginal Effective Total Tax Rate Under Baseline PolicyMarginal Effective Total Tax Rate Under Reform PolicyChange from Baseline (pp)
0Overall22.06107020.280837-1.780234
1Corporations22.05344021.173608-0.879832
2Equity Financed24.29053423.435529-0.855005
3Debt Financed14.09948713.100244-0.999243
4Pass-Through Entities23.67969420.858889-2.820805
5Equity Financed22.92487418.482954-4.441920
6Debt Financed26.91106229.7923812.881319
\n", + "
" + ], + "text/plain": [ + " \\\n", + "0 Overall \n", + "1 Corporations \n", + "2 Equity Financed \n", + "3 Debt Financed \n", + "4 Pass-Through Entities \n", + "5 Equity Financed \n", + "6 Debt Financed \n", + "\n", + " Marginal Effective Total Tax Rate Under Baseline Policy \\\n", + "0 22.061070 \n", + "1 22.053440 \n", + "2 24.290534 \n", + "3 14.099487 \n", + "4 23.679694 \n", + "5 22.924874 \n", + "6 26.911062 \n", + "\n", + " Marginal Effective Total Tax Rate Under Reform Policy \\\n", + "0 20.280837 \n", + "1 21.173608 \n", + "2 23.435529 \n", + "3 13.100244 \n", + "4 20.858889 \n", + "5 18.482954 \n", + "6 29.792381 \n", + "\n", + " Change from Baseline (pp) \n", + "0 -1.780234 \n", + "1 -0.879832 \n", + "2 -0.855005 \n", + "3 -0.999243 \n", + "4 -2.820805 \n", + "5 -4.441920 \n", + "6 2.881319 " + ] + }, + "execution_count": 22, + "metadata": {}, + "output_type": "execute_result" + } + ], + "source": [ + "# Look at differences in METTRs between the two policies\n", + "calc1.summary_table(calc2) # calc1 is the current law baseline, calc2 the current policy baseline\n", + "# NOTE: in the table below, the current law baseline will be referred to as the \"baseline\"\n", + "# and the current policy baseline will be referred to as the \"reform\"" + ] + }, + { + "cell_type": "code", + "execution_count": 14, + "metadata": {}, + "outputs": [ + { + "data": { + "text/plain": [ + "array([0.20116501])" + ] + }, + "execution_count": 14, + "metadata": {}, + "output_type": "execute_result" + } + ], + "source": [ + "p.tau_pt" + ] + }, + { + "cell_type": "code", + "execution_count": null, + "metadata": {}, + "outputs": [], + "source": [] + } + ], + "metadata": { + "kernelspec": { + "display_name": "Python 3 (ipykernel)", + "language": "python", + "name": "python3" + }, + "language_info": { + "codemirror_mode": { + "name": "ipython", + "version": 3 + }, + "file_extension": ".py", + "mimetype": "text/x-python", + "name": "python", + "nbconvert_exporter": "python", + "pygments_lexer": "ipython3", + "version": "3.12.2" + } + }, + "nbformat": 4, + "nbformat_minor": 4 +}