Add contributed owners draw SECA reform

changelog.d/reform-pass-through-owners-draw-seca.added.md

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+Add an opt-in contributed reform applying SECA to owners' draws from pass-through profits, with configurable phase-in, cap, HI, deduction, and benefit-credit treatment.
+
+Return zero draw in inactive historical years so the default AIME lookback does not read reporting-floor parameters before they exist.
+
+Connect the actual owners' draw exclusion to the active-business NIIT reform, respecting OASDI room, optional HI and explicit net-earnings factors.

docs/contributed_reforms/owners_draw.md

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+# Owners' draw SECA reform
+
+This contributed reform brings eligible pass-through profits into the SECA
+OASDI base. It is off by default. The example configuration phases in a share
+of 0.1 in 2027, rising by 0.1 annually to 1 in 2036. These are custom example
+settings, not enacted law or a complete implementation of an OACT provision.
+Population scoring uses the tax side only.
+
+## Parameters
+
+All settings are under `gov.contrib.ssa.owners_draw`.
+
+| Parameter | Default | Meaning |
+| --- | --- | --- |
+| `in_effect` | `false` | Enable the reform. |
+| `start_year` | `2027` | First affected calendar year. |
+| `phase_in_years` | `10` | Positive duration of the linear phase-in. |
+| `phase_in_share` | `-1` | Derive the linear share; an annual value in [0, 1] overrides it. |
+| `net_earnings_factor` | `0` | Derive the standard SECA factor; a value in (0, 1] overrides it. |
+| `material_participation_only` | `true` | Use nonpassive income as the participation proxy. |
+| `include_hi` | `false` | Also tax adjusted draw earnings at the uncapped SECA HI rate. |
+| `benefit_credit` | `true` | Add adjusted annual draw earnings to the existing AIME earnings history before its annual cap. |
+| `half_seca_deduction` | `true` | Apply the existing section 164(f) deductible share to added SECA. |
+| `room_cap_basis` | `0` | Preserve the current-law OASDI cap; `1` removes the draw ceiling. |
+
+The derived share is `min(max((year - start_year + 1) / phase_in_years, 0), 1)`.
+Activation and start-year checks still apply to explicit share overrides.
+The current-law cap is copied before user reforms, so removing the general
+payroll cap does not silently remove this draw ceiling.
+
+## Input contract and signed losses
+
+For each Person, define total signed entity income
+`T = s_corp_income + partnership_income`, passive subset
+`Q = passive_partnership_s_corp_income`, and already-SE partnership subset
+`K = partnership_self_employment_net_earnings`. Both Q and K are already in T;
+K is a gross source amount before SECA's net-earnings adjustment.
+
+With disjoint passive and already-SE subsets, the signed active residual is
+`G = T - Q - K`. If both subsets are nonzero, either supply
+`owners_draw_subsets_are_disjoint: true` or the signed intersection in
+`owners_draw_passive_se_overlap`. The latter yields
+`K_active = K - overlap` and `G = T - Q - K_active`. Ambiguous classifications
+raise an error. If either subset is zero, disjointness follows without an
+additional assertion. With `material_participation_only: false`, include the
+passive subset and subtract the entire already-SE K instead.
+
+Signed profits and losses net within the owner's supplied entity totals
+before flooring the residual. This is an approximation without entity-level
+detail. A negative residual does not offset wages or existing SE earnings.
+[26 U.S.C. 1402(a)](https://www.law.cornell.edu/uscode/text/26/1402#a)
+provides the comparable income-minus-deductions approach for net SE earnings;
+its existing exclusions are not a legal basis for this contributed expansion.
+Nonpassive status is a material-participation proxy and does not identify
+every legal limited-partner class.
+
+## Gross draw, adjusted earnings, and cap priority
+
+The planned gross draw is `D_planned = share * max(G, 0)`. The default
+netting factor is the existing model expression:
+
+```text
+q = 1 - gov.irs.ald.misc.employer_share
+        * (gov.irs.self_employment.rate.social_security
+           + gov.irs.self_employment.rate.medicare)
+```
+
+Current rates produce 0.9235. Rate reforms flow through q, including when HI
+on the incremental draw is off. An explicit factor override is available.
+The planned adjusted draw `q * D_planned` must independently meet the existing
+`gov.irs.self_employment.net_earnings_exemption` ($400 at current settings).
+Otherwise actual gross draw D and adjusted earnings N_D are both zero.
+This independent floor preserves existing SE computations; it is a specific
+modeling choice rather than an integrated new SECA statute.
+
+Let W be existing taxable wages, S the already adjusted and capped existing
+`social_security_taxable_self_employment_income`, and C the preserved cap.
+For the default cap basis:
+
+```text
+room = max(C - W - S, 0)
+draw_oasdi_base = min(N_D, room)
+added_OASDI = draw_oasdi_base * SECA_OASDI_rate
+```
+
+Wages have priority, then existing SE earnings, then the draw. The independent
+draw outputs leave the existing SE base intact. Added tax enters the existing
+SECA liability variables, so payroll and OASDI accounting include it once.
+HI inclusion adds `N_D * SECA_HI_rate` without the OASDI ceiling. The deduction
+uses `gov.irs.ald.self_employment_tax.percent_deductible`, distinct from the
+employer-share parameter used to derive q, and retains nondependent aggregation.
+No second copy of the source income is added to gross income or AGI.
+
+Outputs include `owners_draw_active_income`, `owners_draw_planned_gross`,
+`owners_draw_gross`, `owners_draw_net_earnings_factor`,
+`owners_draw_net_earnings`, `owners_draw_oasdi_room`,
+`owners_draw_oasdi_base`, `owners_draw_oasdi_tax`, and `owners_draw_hi_tax`.
+
+For the current-law cap basis, the taxed draw is nonnegative and no larger
+than remaining room, adjusted earnings, or actual gross draw. Adding the
+draw cannot push otherwise capped covered earnings beyond C. Increasing the
+phase-in share cannot reduce draw tax when other inputs and settings stay
+fixed. Already-SE income is removed before computing the draw, and disabled
+years retain baseline tax and deduction behavior. The `1` cap option
+intentionally permits earnings above C.
+
+## Benefit credit and active NIIT interaction
+
+`owners_draw_credited_earnings` exposes N_D when benefit credit is enabled,
+and zero otherwise. The flag has no tax effect. The reform passes these
+annual earnings to the existing `ss_aime` earnings-history helper and adds
+them before applying each year's wage-base cap. A supplied positive
+`ss_aime_input` retains its baseline precedence. This reform does not append
+an amount to final AIME or alter reported benefits. This bridge inherits
+main's AIME lookback and age rules and its separate
+`gov.ssa.social_security.wage_base` path, last authored for 2026; it does not
+synchronize that path with the current tax cap. Mini-PIA integration and a
+complete annual-history ledger remain separate future work.
+
+`owners_draw_niit_exclusion` is the matching gross-profit exclusion for a
+S.770 active-business NIIT option. With OASDI only it is
+`draw_oasdi_base / q`: only profits whose adjusted earnings actually face
+SECA are excluded. With HI enabled it is the entire actual gross draw D,
+because N_D faces uncapped HI. Profits beyond OASDI room remain in the active
+base when HI is off. The undrawn share and any floor-rejected planned draw
+also remain. Existing already-SE gross K_active must separately be excluded
+regardless of the OASDI cap because existing SE earnings face uncapped HI.
+When both reforms are active, `s770_active_business_income` consumes this
+calculated exclusion, including an explicit net-factor override. When owners
+draw is disabled, before its start year, or uninstalled, the S.770 manual
+draw hooks retain their original behavior.
+
+The automatic joint route requires `material_participation_only: true`.
+Passive-inclusive draws remain supported by the standalone owners' draw
+reform, but the joint active-business calculation raises an explicit error
+for that setting: the aggregate draw does not identify which taxed profits
+belong in the active residual or in NII. Supporting that combination requires
+a validated source allocation, including NII's separate
+`s770_nii_fica_seca_income` hook. Subtracting the entire passive-inclusive draw
+from active profits would misallocate the remaining bases between tax rates.
+
+## Data limitations
+
+The intended field contract is separate S-corporation and partnership totals,
+with the combined section 469 passive subset subtracted once and the
+already-SE partnership subset removed without double counting.
+
+Current production exports force `s_corp_income` to zero and put combined
+nonpassive S-corporation and partnership donor income into `partnership_income`.
+Calibration carries passive income mass into that combined column, while
+`passive_partnership_s_corp_income` is absent and defaults to zero.
+`partnership_self_employment_net_earnings` is present. An absent passive
+column does not establish that passive income is zero. This can overstate the
+active residual and makes population results provisional.
+
+[Microcosm #1251](https://github.com/PolicyEngine/microcosm/pull/1251) repairs
+the total/passive contract, and
+[#1261](https://github.com/PolicyEngine/microcosm/pull/1261) separates entity
+totals. Nonprovisional population scoring requires a pinned artifact containing
+these repairs and a receipt validating the stored columns and their meanings.
+No population impact is measured by this PR; the hub will measure it.
+
+## Comparable OACT provisions
+
+OACT's current [coverage provision F12](https://www.ssa.gov/OACT/solvency/provisions/coverage.html)
+says, “make all distributions to all pass-through business owners up to the
+earnings cap subject to the SECA tax”. Its current table starts in 2029 and
+requires material participation. This reform's example 2027–2036 phase-in
+and default OASDI-only treatment are distinct choices.
+
+OACT's current [payroll-tax provisions](https://www.ssa.gov/OACT/solvency/provisions/payrolltax.html)
+separate rate increases, taxation above the taxable maximum, and partial
+taxation above it. The older E5 label belongs to the
+[legacy contribution-and-benefit-base table](https://www.ssa.gov/OACT/solvency/provisions/wagebase.html),
+which uses the 2008 Trustees assumptions. E5 says, “Raise the taxable maximum
+amount (the contribution and benefit base) to include 90 percent of total
+OASDI covered earnings.” Its phased higher cap also earns benefit credit.
+It is not a current 2026 E5 category. Cap changes and benefit-credit choices
+are distinct from expanding the owners' draw base.

policyengine_us/parameters/gov/contrib/ssa/owners_draw/benefit_credit.yaml

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+description: Whether adjusted owners' draw earnings are available for annual covered-earnings benefit computation; this flag has no tax effect.
+values:
+  0000-01-01: true
+metadata:
+  unit: bool
+  label: Owners' draw benefit credit
+  economy: false

policyengine_us/parameters/gov/contrib/ssa/owners_draw/half_seca_deduction.yaml

@@ -0,0 +1,10 @@
+description: Whether added owners' draw SECA liability qualifies for the deduction at the existing section 164(f) deductible share.
+values:
+  0000-01-01: true
+metadata:
+  unit: bool
+  label: Owners' draw SECA deduction
+  economy: false
+  reference:
+    - title: 26 U.S.C. 164(f)
+      href: https://www.law.cornell.edu/uscode/text/26/164#f

policyengine_us/parameters/gov/contrib/ssa/owners_draw/in_effect.yaml

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+description: Whether the contributed owners' draw reform subjects eligible pass-through profits to SECA.
+values:
+  0000-01-01: false
+metadata:
+  unit: bool
+  label: Owners' draw reform in effect
+  economy: false
+  reference:
+    - title: SSA OACT pass-through business distributions provision F12
+      href: https://www.ssa.gov/OACT/solvency/provisions/coverage.html

policyengine_us/parameters/gov/contrib/ssa/owners_draw/include_hi.yaml

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+description: Whether adjusted owners' draw earnings also face uncapped SECA HI tax.
+values:
+  0000-01-01: false
+metadata:
+  unit: bool
+  label: Owners' draw HI inclusion
+  economy: false

policyengine_us/parameters/gov/contrib/ssa/owners_draw/material_participation_only.yaml

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+description: Whether owners' draw eligibility is restricted to nonpassive income, used as the material-participation proxy.
+values:
+  0000-01-01: true
+metadata:
+  unit: bool
+  label: Owners' draw material-participation restriction
+  economy: false
+  reference:
+    - title: SSA OACT pass-through business distributions provision F12
+      href: https://www.ssa.gov/OACT/solvency/provisions/coverage.html

policyengine_us/parameters/gov/contrib/ssa/owners_draw/net_earnings_factor.yaml

@@ -0,0 +1,10 @@
+description: An owners' draw net-earnings factor override in (0, 1]; zero derives one minus the employer share times the sum of the SECA OASDI and HI rates.
+values:
+  0000-01-01: 0
+metadata:
+  unit: /1
+  label: Owners' draw net-earnings factor override
+  economy: false
+  reference:
+    - title: 26 U.S.C. 1402(a)(12)
+      href: https://www.law.cornell.edu/uscode/text/26/1402#a_12

policyengine_us/parameters/gov/contrib/ssa/owners_draw/phase_in_share.yaml

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+description: An annual owners' draw share override in [0, 1]; -1 uses the linear schedule from start_year and phase_in_years.
+values:
+  0000-01-01: -1
+metadata:
+  unit: /1
+  label: Owners' draw phase-in share override
+  economy: false

policyengine_us/parameters/gov/contrib/ssa/owners_draw/phase_in_years.yaml

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+description: The positive number of years over which the owners' draw share rises linearly to one, including the start year.
+values:
+  0000-01-01: 10
+metadata:
+  unit: year
+  label: Owners' draw phase-in years
+  economy: false

policyengine_us/parameters/gov/contrib/ssa/owners_draw/room_cap_basis.yaml

@@ -0,0 +1,7 @@
+description: "The owners' draw OASDI ceiling: 0 uses the current-law cap preserved before reforms, and 1 imposes no ceiling."
+values:
+  0000-01-01: 0
+metadata:
+  unit: int
+  label: Owners' draw OASDI cap basis
+  economy: false

policyengine_us/parameters/gov/contrib/ssa/owners_draw/start_year.yaml

@@ -0,0 +1,7 @@
+description: The first calendar year of the contributed owners' draw phase-in when enabled.
+values:
+  0000-01-01: 2027
+metadata:
+  unit: year
+  label: Owners' draw start year
+  economy: false

policyengine_us/reforms/reforms.py

@@ -12,6 +12,7 @@
 from .cbo.payroll import (
     create_increase_taxable_earnings_for_social_security_reform,
 )
+from .ssa.owners_draw import create_owners_draw_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
@@ -368,6 +369,7 @@
 
 
 def create_structural_reforms_from_parameters(parameters, period):
+    owners_draw = create_owners_draw_reform(parameters, period)
     afa_reform = create_american_family_act_with_baby_bonus_reform(parameters, period)
     winship_reform = create_eitc_winship_reform(parameters, period)
     dc_kccatc_reform = create_dc_kccatc_reform(parameters, period)
@@ -605,6 +607,7 @@ def create_structural_reforms_from_parameters(parameters, period):
     s770_section_8 = create_s770_section_8_reform(parameters, period)
 
     reforms = [
+        owners_draw,
         s770_section_8,
         afa_reform,
         winship_reform,