Remove the abolish-tax structural reforms so household totals keep every other tax

changelog.d/fix-reform-household-tax-drift.fixed.md

@@ -0,0 +1 @@
+With the abolish-federal-income-tax or abolish-payroll-tax parameter on, household tax and net income now count every other tax: the Idaho permanent building fund tax, the California, Indiana, North Carolina, Oklahoma and Pennsylvania use taxes, and every local income and occupational tax (only New York City's was counted). Pennsylvania refundable credits are no longer counted twice, and federal refundable credits leave household net income in every year the federal income tax is abolished, including when the parameter is first set after 2024.

changelog.d/fix-reform-household-tax-drift.removed.md

@@ -0,0 +1 @@
+Removed the abolish-federal-income-tax and abolish-payroll-tax structural reforms (`policyengine_us.reforms.federal`). Their parameters, `gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax` and `abolish_payroll_tax`, still abolish the taxes through the baseline formulas. Also removed the parameters `gov.household.household_tax_before_refundable_credits`, which only those reforms read, and `gov.household.household_refundable_credits`, which nothing read.

policyengine_us/reforms/reforms.py

@@ -12,8 +12,6 @@
     create_increase_taxable_earnings_for_social_security_reform,
 )
 from .congress.wyden_smith import create_ctc_expansion_reform
-from .federal import create_abolish_federal_income_tax_reform
-from .federal import create_abolish_payroll_tax_reform
 from .biden.budget_2025 import (
     create_medicare_and_investment_tax_increase_reform,
 )
@@ -381,10 +379,6 @@ def create_structural_reforms_from_parameters(parameters, period):
     )
     ctc_expansion = create_ctc_expansion_reform(parameters, period)
 
-    abolish_federal_income_tax = create_abolish_federal_income_tax_reform(
-        parameters, period
-    )
-    abolish_payroll_tax = create_abolish_payroll_tax_reform(parameters, period)
     capital_gains_tax_increase = create_capital_gains_tax_increase_reform(
         parameters, period
     )
@@ -605,8 +599,6 @@ def create_structural_reforms_from_parameters(parameters, period):
         remove_head_of_household,
         increase_taxable_earnings_for_social_security_reform,
         ctc_expansion,
-        abolish_federal_income_tax,
-        abolish_payroll_tax,
         medicare_and_investment_tax_increase,
         capital_gains_tax_increase,
         halve_joint_eitc_phase_out_rate,

policyengine_us/tests/policy/contrib/federal/abolish_federal_income_tax.yaml

@@ -1,23 +1,26 @@
-- name: Abolish federal income tax reform
+# With gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax on,
+# income_tax_before_refundable_credits is zero and household refundable tax
+# credits leave out federal refundable credits. Every other component of the
+# household totals stays. Most cases pin the other components and leave one
+# to its own formula, with federal income tax left to its formula.
+
+- name: Abolishing federal income tax drops federal tax and refundable credits
   period: 2022
-  reforms: policyengine_us.reforms.federal.abolish_federal_income_tax.abolish_federal_income_tax
   input:
     gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
-    income_tax_before_refundable_credits: 1_200
     income_tax_refundable_credits: 800
     co_income_tax_before_refundable_credits: 1_000
     hi_refundable_credits: 600
   output:
+    income_tax_before_refundable_credits: 0
     household_refundable_tax_credits: 600
     household_state_tax_before_refundable_credits: 1_000
     household_tax_before_refundable_credits: 1_000
 
-- name: Multiple state refundable credits
+- name: Abolishing federal income tax keeps several state refundable credits
   period: 2022
-  reforms: policyengine_us.reforms.federal.abolish_federal_income_tax.abolish_federal_income_tax
   input:
     gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
-    income_tax_before_refundable_credits: 1_200
     income_tax_refundable_credits: 800
     co_income_tax_before_refundable_credits: 1_000
     hi_refundable_credits: 600
@@ -27,7 +30,7 @@
     household_state_tax_before_refundable_credits: 1_000
     household_tax_before_refundable_credits: 1_000
 
-- name: No reform
+- name: Federal income tax and refundable credits count when not abolished
   period: 2022
   input:
     gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: false
@@ -42,7 +45,6 @@
 
 - name: Abolishing federal income tax preserves Montgomery County refundable EITC
   period: 2024
-  reforms: policyengine_us.reforms.federal.abolish_federal_income_tax.abolish_federal_income_tax
   input:
     gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
     age: 30
@@ -59,7 +61,6 @@
 
 - name: Abolishing federal income tax includes NYC refundable credits exactly once
   period: 2024
-  reforms: policyengine_us.reforms.federal.abolish_federal_income_tax.abolish_federal_income_tax
   input:
     gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
     age: 30
@@ -73,3 +74,71 @@
     household_refundable_local_tax_credits: 200
     household_refundable_tax_credits: 300
     household_tax: -300
+
+- name: Abolishing federal income tax keeps the Idaho permanent building fund tax
+  period: 2025
+  input:
+    gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
+    state_code: ID
+    employment_income: 60_000
+    employee_payroll_tax: 4_590
+    income_tax_refundable_credits: 800
+    id_income_tax_before_refundable_credits: 2_000
+    id_refundable_credits: 100
+    household_market_income: 60_000
+    household_benefits: 0
+  output:
+    income_tax_before_refundable_credits: 0
+    id_pbf: 10
+    household_state_tax_before_refundable_credits: 2_010
+    household_tax_before_refundable_credits: 6_600  # 4,590 + 2,000 + 10
+    household_refundable_tax_credits: 100
+    household_net_income: 53_500  # 60,000 + 100 - 6,600
+
+- name: Abolishing federal income tax keeps California use tax
+  period: 2025
+  input:
+    gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
+    state_code: CA
+    employment_income: 60_000
+    employee_payroll_tax: 600
+    ca_income_tax_before_refundable_credits: 1_000
+    ca_use_tax: 20
+  output:
+    income_tax_before_refundable_credits: 0
+    state_use_tax: 20
+    household_state_tax_before_refundable_credits: 1_020
+    household_tax_before_refundable_credits: 1_620  # 600 + 1,000 + 20
+
+- name: Abolishing federal income tax keeps the Wilmington earned income tax
+  period: 2025
+  input:
+    gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
+    state_code: DE
+    in_wilmington: true
+    employment_income: 40_000
+    employee_payroll_tax: 3_060
+    de_income_tax_before_refundable_credits: 1_500
+  output:
+    income_tax_before_refundable_credits: 0
+    de_wilmington_earned_income_tax: 500  # 40,000 * 1.25%
+    local_income_tax_before_refundable_credits: 500
+    household_tax_before_refundable_credits: 5_060  # 3,060 + 1,500 + 500
+
+- name: Abolishing federal income tax counts Pennsylvania refundable credits once
+  period: 2025
+  input:
+    gov.contrib.ubi_center.flat_tax.abolish_federal_income_tax: true
+    state_code: PA
+    income_tax_refundable_credits: 800
+    pa_income_tax_after_forgiveness: 100
+    pa_use_tax: 20
+    pa_refundable_tax_credits: 5
+    household_market_income: 1_000
+    household_benefits: 0
+  output:
+    pa_income_tax: 95
+    household_tax_before_refundable_credits: 120  # 100 + 20, before the credit
+    household_refundable_tax_credits: 5
+    household_tax: 115
+    household_net_income: 885  # 1,000 + 5 - 120