Expanded CTC reform including a reformed phase-in structure

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: minor
+  changes:
+    added:
+    - Expanded CTC reform including a reformed phase-in structure.

policyengine_us/parameters/gov/contrib/ctc/eppc/expanded_ctc/in_effect.yaml

@@ -0,0 +1,10 @@
+description: An expanded Child Tax Credit amount with an alternative phase-in structure is provided, if this is true.
+values:
+  0000-01-01: false
+metadata:
+  unit: bool
+  period: year
+  label: Expanded CTC in effect
+  reference:
+    - title: EPPC Tax Teams Comment on Working Families
+      href: https://eppc.org/wp-content/uploads/2024/10/Tax-Teams-Comment-on-Working-Families.pdf

policyengine_us/reforms/ctc/eppc/__init__.py

@@ -0,0 +1,3 @@
+from .expanded_ctc import (
+    create_expanded_ctc_reform,
+)

policyengine_us/reforms/ctc/eppc/expanded_ctc.py

@@ -0,0 +1,190 @@
+from policyengine_us.model_api import *
+
+
+def create_expanded_ctc() -> Reform:
+    class ctc_phase_in(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "CTC phase-in"
+        unit = USD
+        definition_period = YEAR
+        reference = "https://eppc.org/wp-content/uploads/2024/10/Tax-Teams-Comment-on-Working-Families.pdf"
+
+        def formula(tax_unit, period, parameters):
+            tax = tax_unit("income_tax_pre_ctc", period)
+            total_benefits = tax_unit.household("household_benefits", period)
+            max_benefit_amount = tax_unit("maximum_benefits", period)
+            benefit_reduction = max_benefit_amount - total_benefits
+            tax_with_benefit_reduction = tax + benefit_reduction
+            p = parameters(period).gov.irs.credits.ctc.refundable.phase_in
+            return max_(p.rate * tax_with_benefit_reduction, 0)
+
+    class income_tax_non_refundable_credits_pre_ctc(Variable):
+        value_type = float
+        entity = TaxUnit
+        definition_period = YEAR
+        label = "federal non-refundable income tax credits"
+        unit = USD
+
+        def formula(tax_unit, period, parameters):
+            non_ref_credits = parameters(period).gov.irs.credits.non_refundable
+            credits = [
+                credit
+                for credit in non_ref_credits
+                if credit not in ["non_refundable_ctc"]
+            ]
+            return add(tax_unit, period, credits)
+
+    class income_tax_refundable_credits_pre_ctc(Variable):
+        value_type = float
+        entity = TaxUnit
+        definition_period = YEAR
+        label = "federal refundable income tax credits"
+        unit = USD
+
+        def formula(tax_unit, period, parameters):
+            ref_credits = parameters(period).gov.irs.credits.refundable
+            credits = [
+                credit
+                for credit in ref_credits
+                if credit not in ["refundable_ctc"]
+            ]
+            return add(tax_unit, period, credits)
+
+    class income_tax_capped_non_refundable_credits(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "non-refundable tax credits"
+        unit = USD
+        documentation = "Capped value of non-refundable tax credits"
+        definition_period = YEAR
+        adds = ["income_tax_non_refundable_credits_pre_ctc"]
+        subtracts = ["income_tax_unavailable_non_refundable_credits"]
+
+    class income_tax_unavailable_non_refundable_credits(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "unavailable non-refundable tax credits"
+        unit = USD
+        documentation = "Total value of non-refundable tax credits that were not available to the filer due to having too low income tax."
+        definition_period = YEAR
+
+        def formula(tax_unit, period, parameters):
+            return -min_(
+                tax_unit("income_tax_before_credits", period),
+                tax_unit("income_tax_non_refundable_credits_pre_ctc", period),
+            ) + tax_unit("income_tax_non_refundable_credits_pre_ctc", period)
+
+    class income_tax_pre_ctc(Variable):
+        value_type = float
+        entity = TaxUnit
+        definition_period = YEAR
+        unit = USD
+        label = "Federal income tax"
+        documentation = "Total federal individual income tax liability."
+
+        def formula(person, period, parameters):
+            if parameters(
+                period
+            ).gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax:
+                return 0
+            else:
+                added_components = add(
+                    person, period, ["income_tax_before_refundable_credits"]
+                )
+                subtracted_components = add(
+                    person, period, ["income_tax_refundable_credits_pre_ctc"]
+                )
+                return added_components - subtracted_components
+
+    class income_tax(Variable):
+        value_type = float
+        entity = TaxUnit
+        definition_period = YEAR
+        unit = USD
+        label = "Federal income tax"
+        documentation = "Total federal individual income tax liability."
+
+        def formula(tax_unit, period, parameters):
+            pre_ctc_tax = tax_unit("income_tax_pre_ctc", period)
+            non_ref_ctc = tax_unit("non_refundable_ctc", period)
+            ref_ctc = tax_unit("refundable_ctc", period)
+            return max_(pre_ctc_tax - non_ref_ctc, 0) - ref_ctc
+
+    class maximum_benefits(Variable):
+        value_type = float
+        entity = TaxUnit
+        definition_period = YEAR
+        label = "Maximum benfit amount which the housheold is entitled to"
+        unit = USD
+        # Currently only includes SNAP, free school meals, and TANF
+
+        def formula(tax_unit, period, parameters):
+            snap_max_allotment = tax_unit.spm_unit(
+                "snap_max_allotment", period
+            )
+            # get maximum free school meal allotment
+            state_group = tax_unit.spm_unit.household(
+                "state_group_str", period
+            )
+            tier = "FREE"
+            p_amount = parameters(period).gov.usda.school_meals.amount
+            nslp_per_child = p_amount.nslp[state_group][tier]
+            sbp_per_child = p_amount.sbp[state_group][tier]
+            school_meals_daily_subsidy = nslp_per_child + sbp_per_child
+            daily_paid_subsidy = tax_unit.spm_unit(
+                "school_meal_paid_daily_subsidy", period
+            )
+            net_daily_subsidy_per_child = (
+                school_meals_daily_subsidy - daily_paid_subsidy
+            )
+            p_school_meals = parameters(period).gov.usda.school_meals
+            children = add(tax_unit, period, ["is_in_k12_school"])
+            school_meal_max_value = (
+                net_daily_subsidy_per_child
+                * children
+                * p_school_meals.school_days
+            )
+            # Get TANF grant standards (maximum amounts)
+            max_federal_tanf = tax_unit.spm_unit("tanf_max_amount", period)
+            max_ny_tanf = tax_unit.spm_unit("ny_tanf_grant_standard", period)
+            tanf_dem_eligible = tax_unit.spm_unit(
+                "is_demographic_tanf_eligible", period
+            )
+            max_dc_tanf = tax_unit.spm_unit("dc_tanf_grant_standard", period)
+            max_co_tanf = tax_unit.spm_unit("co_tanf_grant_standard", period)
+            max_tanf = (
+                max_co_tanf + max_dc_tanf + max_federal_tanf + max_ny_tanf
+            ) * tanf_dem_eligible
+            return snap_max_allotment + school_meal_max_value + max_tanf
+
+    class reform(Reform):
+        def apply(self):
+            self.neutralize_variable("eitc")
+            self.neutralize_variable("head_of_household_eligible")
+            self.neutralize_variable("cdcc")
+            self.update_variable(ctc_phase_in)
+            self.update_variable(income_tax)
+            self.update_variable(income_tax_pre_ctc)
+            self.update_variable(income_tax_unavailable_non_refundable_credits)
+            self.update_variable(income_tax_refundable_credits_pre_ctc)
+            self.update_variable(income_tax_non_refundable_credits_pre_ctc)
+            self.update_variable(income_tax_capped_non_refundable_credits)
+            self.update_variable(maximum_benefits)
+
+    return reform
+
+
+def create_expanded_ctc_reform(parameters, period, bypass: bool = False):
+    if bypass:
+        return create_expanded_ctc()
+
+    p = parameters(period).gov.contrib.ctc.eppc.expanded_ctc
+
+    if p.in_effect:
+        return create_expanded_ctc()
+    else:
+        return None
+
+
+expanded_ctc = create_expanded_ctc_reform(None, None, bypass=True)

policyengine_us/reforms/reforms.py

@@ -65,6 +65,9 @@
 from .second_earner import (
     create_second_earner_tax_reform,
 )
+from .ctc.eppc import (
+    create_expanded_ctc_reform,
+)
 
 
 from policyengine_core.reforms import Reform
@@ -148,6 +151,7 @@ def create_structural_reforms_from_parameters(parameters, period):
     second_earner_tax_reform = create_second_earner_tax_reform(
         parameters, period
     )
+    expanded_ctc = create_expanded_ctc_reform(parameters, period)
 
     reforms = [
         afa_reform,
@@ -179,6 +183,7 @@ def create_structural_reforms_from_parameters(parameters, period):
         repeal_state_dependent_exemptions,
         ctc_older_child_supplement,
         second_earner_tax_reform,
+        expanded_ctc,
     ]
     reforms = tuple(filter(lambda x: x is not None, reforms))
 

policyengine_us/tests/policy/contrib/ctc/eppc/expanded_ctc.yaml

@@ -0,0 +1,141 @@
+- name: Base test
+  period: 2024
+  reforms: policyengine_us.reforms.ctc.eppc.expanded_ctc.expanded_ctc
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: true
+    income_tax_pre_ctc: 800
+    household_benefits: 700
+    maximum_benefits: 900
+  output:
+    ctc_phase_in: 150
+
+- name: Negative pre-ctc income tax
+  period: 2024
+  reforms: policyengine_us.reforms.ctc.eppc.expanded_ctc.expanded_ctc
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: true
+    income_tax_pre_ctc: -1_000
+    maximum_benefits: 0
+  output:
+    ctc_phase_in: 0
+
+- name: Single parent of one child, $20k income
+  period: 2024
+  reforms: policyengine_us.reforms.ctc.eppc.expanded_ctc.expanded_ctc
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: true
+    people:
+      person1:
+        age: 40
+        employment_income: 20_000
+      person2:
+        age: 10
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+  output:
+    non_refundable_ctc: 540
+    refundable_ctc: 1_460
+    income_tax_pre_ctc: 540
+    income_tax: -1_460
+
+- name: Single parent of one child, $20k income - no reform, no eitc
+  period: 2024
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: false
+    people:
+      person1:
+        age: 40
+        employment_income: 20_000
+      person2:
+        age: 10
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        eitc: 0
+  output:
+    non_refundable_ctc: 300
+    refundable_ctc: 1_700
+    income_tax: -1_700
+
+- name: Joint household with one child, $10k income
+  period: 2024
+  absolute_error_margin: 1
+  reforms: policyengine_us.reforms.ctc.eppc.expanded_ctc.expanded_ctc
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: true
+    people:
+      person1:
+        age: 40
+        employment_income: 10_000
+      person2:
+        age: 40
+      person3:
+        age: 10
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: TX
+  output:
+    non_refundable_ctc: 1_748
+    refundable_ctc: 252
+    ctc_phase_in: 252
+    household_benefits: 8_562
+    maximum_benefits: 10_242
+    income_tax_pre_ctc: 0
+    income_tax: -252
+
+- name: Joint household with one child, $10k income - no reform, no eitc
+  period: 2024
+  absolute_error_margin: 1
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: false
+    people:
+      person1:
+        age: 40
+        employment_income: 10_000
+      person2:
+        age: 40
+      person3:
+        age: 10
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+        eitc: 0
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: TX
+  output:
+    non_refundable_ctc: 875
+    refundable_ctc: 1_125
+    ctc_phase_in: 1_125
+    household_benefits: 8_562
+    income_tax: -1_125
+
+- name: Joint household with one child, $60k income
+  period: 2024
+  absolute_error_margin: 4
+  reforms: policyengine_us.reforms.ctc.eppc.expanded_ctc.expanded_ctc
+  input:
+    gov.contrib.ctc.eppc.expanded_ctc.in_effect: true
+    people:
+      person1:
+        age: 40
+        employment_income: 60_000
+      person2:
+        age: 40
+      person3:
+        age: 10
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+  output:
+    non_refundable_ctc: 2_000
+    refundable_ctc: 0
+    ctc_phase_in: 3_686
+    income_tax_pre_ctc: 3_232
+    income_tax: 1_232