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Calibrate QBID against tax expenditure report #228

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Merged
nikhilwoodruff merged 2 commits into from
May 13, 2025
Merged

Calibrate QBID against tax expenditure report #228

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Calibrate QBID against tax expenditure report
nikhilwoodruff May 13, 2025
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nikhilwoodruff May 13, 2025
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4 changes: 4 additions & 0 deletions changelog_entry.yaml
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Original file line number Diff line number Diff line change
@@ -0,0 +1,4 @@
- bump: minor
changes:
added:
- Calibration of the QBID tax expenditure.
4 changes: 3 additions & 1 deletion policyengine_us_data/datasets/puf/puf.py
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Expand Up @@ -204,7 +204,9 @@ def preprocess_puf(puf: pd.DataFrame) -> pd.DataFrame:
# Ignore cmbtp (estimate of AMT income not in AGI)
# Ignore k1bx14s and k1bx14p (partner self-employment income included in partnership and S-corp income)
qbi = np.maximum(0, puf.E00900 + puf.E26270 + puf.E02100 + puf.E27200)
W2_WAGES_SCALE = 0.16
# 10.1% passthrough rate for W2 wages hits the JCT tax expenditure target for QBID
# https://gist.github.com/nikhilwoodruff/262c80b8b17935d6fb8544647143b854
W2_WAGES_SCALE = 0.101
puf["w2_wages_from_qualified_business"] = qbi * W2_WAGES_SCALE

# Remove aggregate records
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1 change: 1 addition & 0 deletions policyengine_us_data/utils/loss.py
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Expand Up @@ -394,6 +394,7 @@ def _add_tax_expenditure_targets(
"medical_expense_deduction": 11.4e9,
"charitable_deduction": 65.301e9,
"interest_deduction": 24.8e9,
"qualified_business_income_deduction": 63.1e9,
}

def make_repeal_class(deduction_var):
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