Fair Share Tax producing larger revenues

[andersonfrailey]

PR #904 added a Fair Share Tax function to the tax calculator to resolve issue #862, however the revenue estimates (in billions) from taxcalc are significantly larger than other models:

Model	2016	2017	2018	2019	2020	2021	Total
TPC	2.2	2.4	4.7	10.2	12.5	12.8	44.8
Treasury (2016)	6.7	-.093	1.2	2.8	3.7	3.9	17.37
Treasury (2017)	0.0	7.8	-.062	1.3	3.1	4.0	15.58
Joint Committee on Taxation	4.8	5.3	5.7	6.1	6.4	6.7	35
Avg. of other Estimates	3.4	3.6	2.7	5.1	6.4	6.8	28.18
TC	0.0	30.01	30.67	31.04	31.89	32.96	156.57

Part of the difference between TC and TPC appears to be due to TPC's inclusion of a 4% surcharge on AGI's above $5 million and a charitable deduction in their calculations that were left out of TC for simplicity. Factoring both in with the following reform dictionary reduced the revenue estimates significantly, but still not in the ballpark of other estimates:

2017	2018	2019	2020	2021
19.68	20.12	20.32	20.76	21.38

buffettReform = {
    2017: {'_FST_AGI_trt': [0.3],
           '_FST_AGI_thd_lo': [[1.0e6, 1.0e6, 0.5e6, 1.0e6, 1.0e6, 0.5e6]],
           '_FST_AGI_thd_hi': [[2.0e6, 2.0e6, 1.0e6, 2.0e6, 2.0e6, 1.0e6]]
    }
}

The Treasury report also includes the charitable deduction and surcharge as well as an increase in the top capital gains tax rate to 24.2 percent. Including these three reforms brought the revenue projections further down:

2017	2018	2019	2020	2021
12.38	12.74	12.94	13.26	13.70

The TC numbers are still off, but it appears that most of the difference is due to the other models stacking reforms and possibly using different behavioral assumptions.

[martinholmer]

@andersonfrailey, Thanks for all the work comparing other estimates of the revenue effects of a Fair Share Tax in issue #931.

So, is it a fair summary of your findings to say that we have not found any other estimate for the effect of just adding a Fair Share Tax without any other reforms?

[andersonfrailey]

@martinholmer the estimates from the Joint Committee on Taxation are focused solely on the addition of a Fair Share Tax, but so far that is the only one I've found.

[martinholmer]

@MattHJensen said in merged pull request #904:

Tax Foundation has a very similar estimate to Tax-Calculator.
[image: ten-year static estimate of $321 billion]
http://taxfoundation.org/sites/default/files/docs/TaxFoundation-FF496.pdf

Give this finding, it would seem likely that the FairShareTax differences when comparing with other estimates are caused by multiple reform provisions and/or behavioral effects and/or dynamic scoring.

@MattHJensen @feenberg @Amy-Xu @GoFroggyRun @andersonfrailey

[martinholmer]

It would seem as if issue #931 has been resolved, so I am closing it.