Target itemized deduction tax expenditures

policyengine_us_data/tests/test_datasets/test_enhanced_cps.py

@@ -37,3 +37,45 @@ def test_ecps_has_mortgage_interest():
 
     assert sim.calculate("deductible_mortgage_interest").sum() > 1
     assert sim.calculate("interest_expense").sum() > 1
+
+
+def test_ecps_replicates_jct_salt_te():
+    from policyengine_us import Microsimulation
+    from policyengine_core.reforms import Reform
+    from policyengine_core.data import Dataset
+    from policyengine_us_data.datasets import EnhancedCPS_2024
+
+    reform = Reform.from_dict(
+        {
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.JOINT": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SINGLE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SEPARATE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SURVIVING_SPOUSE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.HEAD_OF_HOUSEHOLD": {
+                "2024-01-01.2100-12-31": 0
+            },
+        },
+        country_id="us",
+    )
+
+    baseline = Microsimulation(dataset=EnhancedCPS_2024)
+    reformed = Microsimulation(reform=reform, dataset=EnhancedCPS_2024)
+
+    income_tax_b = baseline.calculate(
+        "income_tax", period=2024, map_to="household"
+    )
+    income_tax_r = reformed.calculate(
+        "income_tax", period=2024, map_to="household"
+    )
+    tax_change = income_tax_r - income_tax_b
+    federal_tax_expenditure = tax_change.sum() / 1e9
+
+    assert abs(federal_tax_expenditure - 20) < 5

policyengine_us_data/utils/loss.py

@@ -2,6 +2,7 @@
 from .soi import pe_to_soi, get_soi
 import numpy as np
 from policyengine_us_data.storage import STORAGE_FOLDER
+from policyengine_core.reforms import Reform
 
 
 def fmt(x):
@@ -132,6 +133,7 @@ def build_loss_matrix(dataset: type, time_period):
     from policyengine_us import Microsimulation
 
     sim = Microsimulation(dataset=dataset)
+    sim.default_calculation_period = time_period
     hh_id = sim.calculate("household_id", map_to="person")
     tax_unit_hh_id = sim.map_result(
         hh_id, "person", "tax_unit", how="value_from_first_person"
@@ -340,10 +342,65 @@ def build_loss_matrix(dataset: type, time_period):
         )
         targets_array.append(row["population_under_5"])
 
+    # SALT tax expenditure targeting
+
+    _add_tax_expenditure_targets(
+        dataset, time_period, sim, loss_matrix, targets_array
+    )
+
     if any(loss_matrix.isna().sum() > 0):
         raise ValueError("Some targets are missing from the loss matrix")
 
     if any(pd.isna(targets_array)):
         raise ValueError("Some targets are missing from the targets array")
 
     return loss_matrix, np.array(targets_array)
+
+
+def _add_tax_expenditure_targets(
+    dataset,
+    time_period,
+    baseline_simulation,
+    loss_matrix: pd.DataFrame,
+    targets_array: list,
+):
+    from policyengine_us import Microsimulation
+
+    # SALT deduction first
+
+    repeal_salt = Reform.from_dict(
+        {
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.JOINT": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SINGLE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SEPARATE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.SURVIVING_SPOUSE": {
+                "2024-01-01.2100-12-31": 0
+            },
+            "gov.irs.deductions.itemized.salt_and_real_estate.cap.HEAD_OF_HOUSEHOLD": {
+                "2024-01-01.2100-12-31": 0
+            },
+        },
+        country_id="us",
+    )
+
+    reform_simulation = Microsimulation(dataset=dataset, reform=repeal_salt)
+    reform_simulation.default_calculation_period = time_period
+
+    income_tax_b = baseline_simulation.calculate(
+        "income_tax", map_to="household"
+    ).values
+    income_tax_r = reform_simulation.calculate(
+        "income_tax", map_to="household"
+    ).values
+    salt_te_values = income_tax_r - income_tax_b
+
+    salt_target = 20e9
+
+    loss_matrix["jct/salt_tax_expenditure"] = salt_te_values
+    targets_array.append(salt_target)