Merge pull request #842 from martinholmer/add-hc-vs-bs-test

Fix typo in BenefitSurtax function and add test_ID_HC_vs_BS

taxcalc/comparison/reform_results.txt

@@ -109,7 +109,7 @@ Increase Itemized Deduction phaseout rate by 1 pts
 Tax-Calculator,3.6,3.8,4.0,4.1
 ""
 limit the tax value of ID to 6% of AGI
-Tax-Calculator,19.4,20.8,22.0,23.5
+Tax-Calculator,19.6,21.0,22.2,23.7
 Budget Options,11,9,8,7
 ""
 CAPITAL GAIN

taxcalc/functions.py

@@ -1159,31 +1159,32 @@ def BenefitSurtax(calc):
     BenefitSurtax function: ...
     """
     if calc.policy.ID_BenefitSurtax_crt != 1.:
-        nobenefits_calc = copy.deepcopy(calc)
-        # hard code the reform
-        nobenefits_calc.policy.ID_Medical_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[0])
-        nobenefits_calc.policy.ID_StateLocalTax_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[1])
-        nobenefits_calc.policy.ID_RealEstate_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[2])
-        nobenefits_calc.policy.ID_casualty_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[3])
-        nobenefits_calc.policy.ID_Miscellaneous_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[4])
-        nobenefits_calc.policy.ID_InterestPaid_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[5])
-        nobenefits_calc.policy.ID_Charity_HC = \
-            int(nobenefits_calc.policy.ID_BenefitSurtax_Switch[6])
-        nobenefits_calc.calc_one_year()
+        # compute income tax liability with no itemized deductions allowed for
+        # the types of itemized deductions covered under the BenefitSurtax
+        no_ID_calc = copy.deepcopy(calc)
+        if calc.policy.ID_BenefitSurtax_Switch[0]:
+            no_ID_calc.policy.ID_Medical_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[1]:
+            no_ID_calc.policy.ID_StateLocalTax_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[2]:
+            no_ID_calc.policy.ID_RealEstate_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[3]:
+            no_ID_calc.policy.ID_Casualty_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[4]:
+            no_ID_calc.policy.ID_Miscellaneous_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[5]:
+            no_ID_calc.policy.ID_InterestPaid_HC = 1.
+        if calc.policy.ID_BenefitSurtax_Switch[6]:
+            no_ID_calc.policy.ID_Charity_HC = 1.
+        no_ID_calc.calc_one_year()
         # pylint: disable=protected-access
-        tax_diff = np.where(
-            nobenefits_calc.records._iitax - calc.records._iitax > 0.,
-            nobenefits_calc.records._iitax - calc.records._iitax,
-            0.)
-        surtax_cap = nobenefits_calc.policy.ID_BenefitSurtax_crt *\
-            nobenefits_calc.records.c00100
+        benefit_amount = np.where(
+            no_ID_calc.records._iitax - calc.records._iitax > 0.,
+            no_ID_calc.records._iitax - calc.records._iitax, 0.)
+        benefit_deduction = (calc.policy.ID_BenefitSurtax_crt *
+                             calc.records.c00100)
         calc.records._surtax[:] = calc.policy.ID_BenefitSurtax_trt * np.where(
-            tax_diff > surtax_cap, tax_diff - surtax_cap, 0.)
+            benefit_amount > benefit_deduction,
+            benefit_amount - benefit_deduction, 0.)
         calc.records._iitax += calc.records._surtax
-        calc.records._combined = calc.records._iitax + calc.records._fica
+        calc.records._combined += calc.records._surtax

taxcalc/tests/test_calculate.py

@@ -355,6 +355,45 @@ def test_make_Calculator_increment_years_first():
     assert_allclose(calc.policy._II_em, exp_II_em, atol=0.5, rtol=0.0)
 
 
+def test_ID_HC_vs_BS():
+    """
+    Test that complete haircut of itemized deductions produces same
+    results as a 100% benefit surtax with no benefit deduction.
+    """
+    # specify complete-haircut reform policy and Calculator object
+    hc_reform = {2013: {
+        '_ID_Medical_HC': [1.0],
+        '_ID_StateLocalTax_HC': [1.0],
+        '_ID_RealEstate_HC': [1.0],
+        '_ID_Casualty_HC': [1.0],
+        '_ID_Miscellaneous_HC': [1.0],
+        '_ID_InterestPaid_HC': [1.0],
+        '_ID_Charity_HC': [1.0]}
+    }
+    hc_policy = Policy()
+    hc_policy.implement_reform(hc_reform)
+    hc_records = Records(data=TAXDATA, weights=WEIGHTS, start_year=2009)
+    hc_calc = Calculator(policy=hc_policy, records=hc_records)
+    # specify benefit-surtax reform policy and Calculator object
+    bs_reform = {2013: {
+        '_ID_BenefitSurtax_crt': [0.0],
+        '_ID_BenefitSurtax_trt': [1.0]}
+    }
+    bs_policy = Policy()
+    bs_policy.implement_reform(bs_reform)
+    bs_records = Records(data=TAXDATA, weights=WEIGHTS, start_year=2009)
+    bs_calc = Calculator(policy=bs_policy, records=bs_records)
+    # compare calculated tax results generated by the two reforms
+    hc_calc.calc_all()
+    bs_calc.calc_all()
+    assert_allclose(hc_calc.records._fica,
+                    bs_calc.records._fica,
+                    atol=0.01, rtol=0.0)
+    assert_allclose(hc_calc.records._iitax,
+                    bs_calc.records._iitax,
+                    atol=0.01, rtol=0.0)
+
+
 def test_Calculator_using_nonstd_input(rawinputfile):
     # check Calculator handling of raw, non-standard input data with no aging
     policy = Policy()