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| The two tokens can be obtained from [Don Boyd](mailto:[email protected]). | ||
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| ## Examination results | ||
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| To assess, review the data examination results that compare federal | ||
| agency tax estimates with those generated using the microdata file | ||
| created in each project phase: | ||
| agency tax estimates with those generated using the national microdata | ||
| files created in each project phase: | ||
| [phase 1 results](./tmd/examination/results1.md) and | ||
| [phase 2 results](./tmd/examination/results2.md) and | ||
| [phase 3 results](./tmd/examination/results3.md) and | ||
| [phase 4+ national results](./tmd/examination/results4.md). | ||
| [phase 4+ results](./tmd/examination/results4.md). | ||
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| Phase 3 Data Examination Results | ||
| ================================ | ||
| National Data Examination Results | ||
| ================================= | ||
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| **FINAL RESULTS AS OF 2024-07-21 (after merge of PR 155)** | ||
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| 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. | ||
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| 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). | ||
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| 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. | ||
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| <br> | ||
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| **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 | | ||
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| **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) | | ||
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| <br> | ||
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| **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) | | ||
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| **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) | | ||
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| **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 | | ||
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| **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 | | ||
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| <br> | ||
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| **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 | | ||
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| **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 | | ||
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| **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 | | ||
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| <br> | ||
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| **Implication of Differing Credit Participation Assumptions** | ||
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| 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.) | ||
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| 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).) | ||
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| 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. | ||
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| <br> | ||
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| **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) | | ||
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| <br> | ||
| See examination results links in the [top-level README | ||
| file](https://github.com/PSLmodels/tax-microdata-benchmarking?tab=readme-ov-file#examination-results). |
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| Original file line number | Diff line number | Diff line change |
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|
|
@@ -15,12 +15,3 @@ To generate the microdata files: | |
| 3. Run `make data` | ||
|
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| The two tokens can be obtained from [Don Boyd](mailto:[email protected]). | ||
|
|
||
| To assess, review the data examination results that compare federal | ||
| agency tax estimates with those generated using the microdata file | ||
| created in each project phase: [phase 1 | ||
| results](./tmd/examination/results1.md) and | ||
| [phase 2 | ||
| results](./tmd/examination/results2.md) and | ||
| [phase 3 | ||
| results](./tmd/examination/results3.md). | ||