[HN Gopher] Show HN: Calculator for US individual income tax, fr...
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Show HN: Calculator for US individual income tax, from 1970-present
I wanted to share a simple web app I created recently, which lets
you estimate income taxes owed in the US: https://taxsim.app All
the calculations occur directly in the browser, and are powered by
a Fortran program that has been converted to WASM using emscripten.
This calculator was originally developed in the 1970s [1] by the
non-profit National Bureau of Economic Research. NBER has been
maintaining this F77 codebase for the last 50 years, and uses it
primarily for academic research on tax policy. The Fortran source
code itself is over 1MB of text, because it codifies both federal
and all 50 states' tax laws for each of the last 62 years. I first
learned about NBER TAXSIM [2] a few months ago via an interesting
paper they published "Automatic Tax Filing: Simulating a Pre-
Populated Form 1040" [3]. The Fortran code itself is not open-
source, but is available on request for research purposes. I
reached out to NBER and proposed compiling it to WASM, so it could
be run directly in a browser. With relatively little effort I was
able to create a js/wasm version [4], thanks in huge part to
previous open-source work [5]. This WASM build now powers
https://taxsim.app, which is my attempt to create an interactive UI
to allow for easier exploration of the US tax code. Specific tax
scenarios can also be shared easily, by simply copying the browser
URL. The code for this webapp is also open-source [6]. This was my
first time experimenting with WASM, and I am already a huge fan.
Not only was I able to take a 60 year old codebase and get it
working on every modern browser and device, this work is also now
benefiting the academic community. For example, the js/wasm can be
run directly in V8, which means it can also now be run locally
within R using libv8 [7]. Previously most researchers were
uploading their tax scenarios to NBER's servers via ftp/ssh/http.
[1] https://taxsim.nber.org/feenberg-coutts.pdf [2]
https://taxsim.nber.org/ [3] https://www.nber.org/papers/w30008
[4] https://github.com/tmm1/taxsim.js [5]
https://chrz.de/2020/04/21/fortran-in-the-browser/ [6]
https://github.com/tmm1/taxsim.app [7]
https://github.com/shanejorr/usincometaxes/pull/11
Author : tmm1
Score : 466 points
Date : 2022-06-29 21:22 UTC (1 days ago)
| interblag wrote:
| Bit late to the party but I just wanted to put one top level
| comment saying: this is awesome! I'd never have thought that
| putting a Fortran codebase like this into WASM was so possible.
| And doing so in this way surfaces great, battle-tested
| information, that would be herculean to reimplement and test in
| another language. Really awesome stuff!
| thatfrenchguy wrote:
| Why a 500k$ wages/salaries limit here? :)
| brianmario wrote:
| You can use the gear icon in the upper right to turn the
| sliders into text boxes.
| thatfrenchguy wrote:
| ah thank you :)
| randomhodler84 wrote:
| "640K ought to be enough for anybody"
| aidangrimshaw wrote:
| Sort of tangentially, I'm working with other contributors on
| https://ustaxes.org, an open source tax filing webapp
| https://github.com/ustaxes/UsTaxes.
|
| Currently, many Federal tax forms are supported, as well as tax
| filing for the state of Illinois. Filing for Oregon and
| California is under development!
| dhosek wrote:
| When you say "filing" does this mean it actually electronically
| file the return or it just is able to print out the returns for
| sending in by post?
| aidangrimshaw wrote:
| It calculates the tax amounts and fills them into the IRS and
| state forms to be printed out
| tick_tock_tick wrote:
| This seems beyond misleading it doesn't even have a method to
| enter most of the now illegal methods to lower your tax bill.
|
| Tax straddles were only banned in 1977 before that you should
| have easily been able to more then halve your tax bill with
| futures.
| mywittyname wrote:
| I've never heard of tax straddles, but they sound an awful lot
| like what we now call "tax loss harvesting."
|
| > For example, an investor with a capital gain manipulates
| investments to create an artificial loss from an unrelated
| transaction to offset their gain in a current year, and
| postpone the gain till the following tax year.
| thelamest wrote:
| Doesn't this fit into "other adjustments"? Net operating loss
| is listed among the examples there.
| divbzero wrote:
| Tax straddles--now illegal--is a new concept to me. A couple
| old articles about it from _New York Times_ :
|
| Looking for Tax Losses in Commodities (1977)
| https://www.nytimes.com/1977/12/11/archives/investing-lookin...
|
| I.R.S. Wins On Tax Straddles (1982)
| https://www.nytimes.com/1982/03/10/business/irs-wins-on-tax-...
| yieldcrv wrote:
| Interesting, this is probably why I never heard of straddles
| in a futures context
|
| They are wildly popular in the options (including futures
| options) market, but what is described here would be called a
| calender spread or an unbalanced strangle of some sort. No
| tax benefits from closing long dated contracts early aside
| from losses offsetting the gains
| raptortech wrote:
| This is awesome! Two features requests:
|
| 1. A plot over time
|
| 2. Could you adjust the income for inflation, so when you click
| back 1yr your income goes down accordingly?
| petercooper wrote:
| The US personal tax code looks extremely complicated to British
| eyes, but British people have a similar calculator at their
| disposal at https://listentotaxman.com/ though it only goes back
| to 2000.
| MaxGhenis wrote:
| We've also built an open-source tax and benefit calculator for
| the UK, which also lets you simulate custom policy reforms:
| https://policyengine.org/uk
| nly wrote:
| The thing I find interesting is Americans always claim that
| countries with socialised healthcare have significantly higher
| tax burdens, but if you compare take home salaries between say
| New York and London, or San Fransisco and London, they're not
| that far apart.
|
| That said, in tech Americans seem to make 50%-100% more total
| comp on a cost of living adjusted basis doing exactly the same
| job...
| petercooper wrote:
| The other thing that's interesting is if you ignore private
| payments to healthcare entirely, the US still spends more per
| capita from the _public purse_ on healthcare than the UK
| does. So the US pays a ton of public money and yet most of
| the population still gets nothing unless they pay even more.
| n4r9 wrote:
| > Americans always claim that countries with socialised
| healthcare have significantly higher tax burdens
|
| That's a generalisation, although some conservatives do make
| the claim. It's nonsense, of course: the most other developed
| countries including the UK spend around a third as much per
| person on healthcare. Another victim of poorly regulated
| market consolidation (among other factors).
| ameister14 wrote:
| Agreed. US also doesn't have VAT, though, which makes a fair
| bit of difference. State sales taxes vary but the highest is
| less than half the British VAT. Individual Income taxes are
| what, 25-30% of total tax revenue in the UK? I know OECD
| average is 25%. It's about 42% in the US.
| cyrusthegreat wrote:
| This is awesome! Permanently bookmarked!
| jdasdf wrote:
| It's all blank for me
| mNovak wrote:
| Cool use of emscripten. Is this handling inflation at all? Fixed-
| number items like standard deduction will be impacted by that.
|
| I think it gives a general idea of the tax situation, but
| possibly decreasing accuracy at high incomes, where a tax
| strategy can be implemented specific to the special
| deductions/credits each year, which are difficult to include in
| this form.
| minhazm wrote:
| This calculator doesn't seem to support local income taxes, which
| many states have [1]. For example Maryland has income tax
| brackets than other states, but each county levies its own income
| tax on top of that. I usually use smartasset's income tax
| calculator [2], which also asks for your location so it can
| factor in any local income taxes as needed.
|
| [1] https://www.thebalance.com/cities-that-levy-income-
| taxes-319... [2] https://smartasset.com/taxes/income-taxes
| MaxGhenis wrote:
| SmartAsset is only a rough approximation based on standard
| deductions/exemptions and the rate structure. It excludes tax
| credits and other provisions that make taxsim much more
| accurate, especially for low-income households.
| minhazm wrote:
| But again taxsim is missing local income taxes entirely. That
| makes it automatically inaccurate for millions of people.
| Smart Asset is an estimate but it's at least accurate for the
| cases that it covers and doesn't claim to be a complete tax
| calculator.
|
| Anyway taxsim is obviously the more complete tool, but
| without local income taxes it's unusable for many people like
| me who live in a state that has local income taxes too.
| Aeolun wrote:
| My tax was 50% higher in 1988 than in 2020. Did taxes really come
| down to this extend over the past 30 years?
| onlyrealcuzzo wrote:
| Historically, taxes fluctuated quite a bit.
|
| IIUC, income taxes have been unusually stable the last ~20
| years.
| novok wrote:
| Is there an option to add some cities or counties, like new york
| city's local tax?
| moneywoes wrote:
| How do we know how many percent of people paid tax during these
| times
| zeckalpha wrote:
| I made tiny typo (an extra digit in spouse age) and got a giant
| error, though at least it was actionable
|
| "TAXSIM: Unbelievable spouse age"
| omoikane wrote:
| This error message is hilarious, so I tried to find where the
| threshold is.
|
| Apparently it's not believable that people 115 years or older
| would be filing taxes.
| mgarfias wrote:
| BADASS THANK YOU
| alexb_ wrote:
| This is really cool, but I have to say that sliders are the
| absolute worst way to input income and benefits. Why not just use
| a simple textbox?
| tmm1 wrote:
| You can switch to text boxes via the gear at the top right.
| KerrAvon wrote:
| I wish this would get written up in mainstream media. Hypothesis
| being that if more people knew this existed, it would put
| additional pressure on Congress to simplify tax filing.
| divbzero wrote:
| The number of possible inputs for _Income_ is stunning: 15
| types of income in total.
|
| There are "only" 5 possible inputs under _Deductions & Credits_
| but 3 of them are categories with several subitems:
|
| _Itemized Deductions_
|
| * Home mortgage interest
|
| * Deductible medical expenses
|
| * Motor Vehicle registration fees
|
| * Charitable contributions
|
| * Casulty or Theft losses
|
| _Other Itemized Deductions_
|
| * Other state and local taxes
|
| * Deductible medical expenses (preference share only)
|
| * Miscellaneous expenses
|
| _Other Adjustments_
|
| * Alimony Paid
|
| * Keogh and IRA contributions
|
| * Foreign Income Exclusion
|
| * Net Operating Losses
| m0llusk wrote:
| Potentially interesting to note that the home mortgage
| interest and state tax deductions were long controversial as
| perverse incentives and got dropped during the Trump
| administration.
| lotsofpulp wrote:
| Because standard deduction is so high now, 90% of US tax
| filers do not have to worry about itemizing. According to IRS
| stats website, which I do not have handy on my phone.
| throwaway2037 wrote:
| Hat tip on the reference. I didn't consider the effect.
|
| I found an article about it here:
| https://taxfoundation.org/standard-deduction-itemized-
| deduct...
| physicsguy wrote:
| This is kind of mental. In the UK we have nowhere near as
| many tax deductible things. An ordinary employed person will
| only ever get tax deductions for pension contributions or
| charitable donations. Almost nobody in the UK even has to
| file a tax return; data is returned automatically to the
| government by all employers and so there is no need unless
| you have certain uncommon circumstances.
|
| There are some schemes through employers that reduce your
| taxable income (for e.g. a scheme to purchase a bicycle tax
| free) but these are handled by your employer and work by
| sacrificing some salary in exchange for the benefits.
| pjc50 wrote:
| A piece of politics that is radically different is that the
| UK does not have a right wing which hates the Federal
| government; the UK right wing is not only unitary-statist
| but monarchist.
|
| This results in perverse pressures to make the Federal
| processes that people are exposed to, such as tax filing,
| as bad as possible so that voters also hate the Federal
| government.
| MaxGhenis wrote:
| And for all the complexity of the tax code, it often pales in
| comparison to the version of the tax code we subject low-income
| families to: rules for means-tested benefits.
| 1270018080 wrote:
| A slider for inputting multi digit numbers? Pain.
| lettergram wrote:
| The tax is not accurate historically, for higher income brackets.
| Prior to 2018(?) you could deduct the majority of your state
| income tax from the federal income tax (the "Trump tax cuts").
|
| https://nypost.com/2021/10/05/court-upholds-trump-law-limiti...
|
| Basically, prior to that implementation, you were really paying
| MAX(federal income tax, state income tax). After that
| implementation, you could only deduct a maximum of $10,000 in
| state income tax from federal tax. So it looks more like:
| ADD(federal income tax - $10,000, state income tax)
| mrunkel wrote:
| I don't believe you're calculating the pre law change
| correctly.
|
| You could deduct your state tax from your income for federal
| tax purposes. So if you made 100k and paid 17k in state taxes,
| your federal AGI was 83k. Post change, it would have been 90k.
|
| The Trump era change was really a fuck you to high earners in
| states with high taxes. Shockingly, a majority of those people
| tended to vote for the Democratic Party.
| thelamest wrote:
| Funnily enough, that SALT deduction was disliked by
| economists, as regressive, inefficient and mostly pointless.
| It was bashed by policy think tanks from all sides, e.g.
| Brookings, CRFB, Heritage, CBPP, and Center for American
| Progress.
| dmtroyer wrote:
| come again?
| jrockway wrote:
| This is very interesting. I learned that the last year I made
| enough money to pay AMT is the year they got rid of AMT. Damn!
| PopAlongKid wrote:
| No one "got rid" of AMT, it is still alive and well in both the
| federal tax code and some states, such as California.
|
| In fact, it is more popular than ever: the temporary TCJA tax
| changes (2018-2025) for individuals mostly consisted of moving
| features of AMT into the regular tax regime. No personal
| exemptions, large standard deduction, no mortgage interest
| deduction for equity debt, limited state and local tax (SALT)
| deduction, mostly no miscellaneous itemized deductions, flatter
| tax brackets, etc.
| HWR_14 wrote:
| > no mortgage interest deduction for equity debt
|
| Wait, what? When did that happen?
|
| And did the "for equity debt" mean that it still applies to
| houses?
| PopAlongKid wrote:
| To clarify, these are technical terms for income tax
| purposes, and are _not_ defined by any label a bank may put
| on a loan, such as "HELOC" (home equity line of credit).
|
| Since 1987, whenever you originate or re-finance any
| mortgage, the portion of the proceeds used to buy, build,
| or improve your personal residence is called "acquisition
| debt" (used to acquire the asset), and the remaining
| portion is called "equity debt" since it is secured solely
| by the pre-existing equity in the property and is used for
| anything other than acquisition.
|
| When you re-finance acquisition debt, it remains acqusition
| debt, but any cash-out from the re-finance not used to
| buy/build/improve is equity debt. As you pay down principal
| on the loan, you are considered to first pay off the equity
| debt, before acquisition debt.
| HWR_14 wrote:
| Thanks.
|
| That is a very clear explanation. It seems like that got
| caught up in the whole "no interest other than
| acquisition debt is deductible" rule change.
|
| Also, I know you were enumerating items, not advocating
| for their return. I see the change as good, and didn't
| know if there is a countervailing point of view
| explaining why interest on equity debt should be
| deductible (possibly from the entity that educated you on
| the matter).
| bradgessler wrote:
| This is great!
|
| If you're taking feature requests I'd love to see a bar or line
| chart showing the amount of taxes paid for the Y axis and year on
| the X axis. Would make comparing over time much easier.
| zild3d wrote:
| Was hoping it would adjust today's income for inflation going
| back with a chart over time
| thechao wrote:
| Why is the income limited to 500000$?
| googlryas wrote:
| Very cool, especially hearing about the implementation.
|
| Feature request: Put the effective overall tax rate calculation
| somewhere on the page - so often people are confused that they
| are paying the same percentage tax as their highest marginal tax
| rate, this tool could help elucidate that mistake.
| CSMastermind wrote:
| Would be helpful if there was a way to see a graph of how the
| amounts change over time.
|
| I find myself putting in my info and then click minus on the
| years to see how the years change.
| meter wrote:
| I was curious to see how many kids it would take to lower my
| taxes to zero.
|
| Apparently, you're not allowed to have more than 15 dependents.
| ngcc_hk wrote:
| I may be confused. I just talked with my kids about the problem
| of maintaining some old program in us gov particularly related to
| taxation. Possibly in assembly and last attempt to upgrade run
| out of budget and hence USA gov will forever have issue in
| maintaining it. People knew left and good luck to find my kid
| generation to learn those old thing.
|
| Can you do it the other way round I wonder? Just give up and use
| a new version and ask legal to send this open source to all
| agents. After 3 years day this is the version.
|
| It is not a sim issue. It is not a pre-filled issue. It is a real
| issue.
|
| Or my brief to my kid is wrong. It is about something else.
| omarish wrote:
| This is really cool.. nicely done @tmm1. I've been meaning to dig
| into WASM and this is even more reason to do so.
| ideamotor wrote:
| This is amazing. Would there be a way to estimate future year
| taxes? For example, knowing past years inflation numbers could
| you run possible scenarios of future tax brackets?
|
| The adjustment process seems to be opaque[1] but perhaps you
| could use a regression to estimate it. Then you would only need
| the ability to make those adjustments in this program to run
| future year scenarios.
|
| 1: https://www.irs.gov/newsroom/irs-provides-tax-inflation-
| adju... (I'm uncertain whether this is based on some
| predetermined formula)
| PopAlongKid wrote:
| >Would there be a way to estimate future year taxes?
|
| You can't even always estimate current year taxes, since
| Congress has lately taken to making retroactive changes to the
| tax code even after the end of the tax year (just extending
| their long-term habit of making changes in late December of the
| current year).
| ideamotor wrote:
| Well I'm not looking for 100% accuracy, and it doesn't need
| to cover all types of income. I'm interested in long term
| investment income with various input types of accounts and
| investments given different inflation and tax policy
| scenarios. It just needs to be better than the software I've
| seen which is basically trash (assumes a flat percent tax).
| keehun wrote:
| Are all the dollar amounts in the simulated tax output at the top
| of the page inflation adjusted?
|
| For example, I inputted married, with no dependents with $500,000
| salary and in 1977, the federal amount was $299,864 and in 2020
| was $133,947. I assume these amounts can be compared without
| further adjusting for inflation?
|
| Tangentially, did federal taxes really come down that much?
| nicoburns wrote:
| A quick google shows that yes, there was a 70% marginal tax
| rate (applying to income over $108,300 - not inflation adjusted
| - for a single filer) as recently as 1981
|
| https://taxfoundation.org/historical-income-tax-rates-bracke...
| sgjohnson wrote:
| But nobody ever paid it as there were millions of loopholes.
| UncleMeat wrote:
| Up thread somebody asked what these were. A response had
| credit card interest deductions (rich people aren't running
| a credit card debt today, and certainly not in 1970) and
| easier tax fraud.
|
| This is such a compelling narrative for the "taxes should
| be lower" crowd that I'm skeptical. Granted, this is my
| personal bias. But I would love to see the actual clear
| examples of how people are deducting like 50% of their
| income or whatever they'd need to bring their 70% marginal
| rate down to 35%.
| standardUser wrote:
| You have to be actually wealthy for most "loopholes" come
| into play. Just like today, non-wealthy high earners take
| the biggest hit in taxes. And there are way more of those
| than actually wealthy people. Back then, the hit was even
| bigger, but the group being hit the hardest was smaller.
|
| Politically, this setup seems to help keep those high-
| earners voting for lower taxes, which makes sense to them
| since they're the ones paying the highest overall rate.
| refurb wrote:
| You did have to be wealthy, but $100,000 in 1980 is
| equivalent to $383,000 today which is pretty wealthy. So
| it's basically income above $400,000 today.
|
| And many of the tax "loopholes" involved real estate
| investment which would be accessible at that income
| level.
| jliptzin wrote:
| $380k is not wealthy. Most people can live just fine on
| $380k, don't get me wrong, but it is basically upper
| middle class. If $380k/yr is wealthy then what is $20
| million/yr?
| trash_goblin wrote:
| refurb wrote:
| $400k per year put you in the top 1% of income earners in
| the US. 99% of people make less than those people.
|
| That's wealthy to me.
| LeonB wrote:
| "More wealthy"?
|
| 100K in 1980 was sufficient to build and compound your
| wealth. That's wealthy.
| BoiledCabbage wrote:
| While technically a better term for assets than income,
| we'll continue to use "wealthy".
|
| You should realize that multiple things can be wealthy.
|
| $380k is wealthy and $20M is also wealthy. $20M is
| wealthier than $380k.
|
| Im the US, an income of $380k is the 99th percentile.
|
| In a higher COL state of California, an income of $380k
| is still in the 99th percentile.
|
| And for the very high COL city of San Francisco, an
| income of $380k is still just about the 99th percentile
|
| If a person is making $380k, regardless of what they may
| believe, they are absolutely not middle class in any way
| shape or form. They are "wealthy".
| zizee wrote:
| I think you should not be redefining what words mean to
| make your argument.
|
| Wealthy means to have wealth. Wealth is the abundance of
| financial assets. Income can become wealth if
| saved/invested, but it is not wealth.
|
| There are numerous definitions of middle class, with many
| being "not upper, not lower". Upper class is defined as
| those that have the most wealth (explicitly not income)
| and political power.
|
| $People with 380k of income, but without significant
| assets are not upper class. They would be considered
| upper middle class.
|
| https://www.merriam-webster.com/dictionary/wealthy
|
| https://en.wikipedia.org/wiki/Wealth
|
| https://en.wikipedia.org/wiki/Middle_class
|
| https://en.wikipedia.org/wiki/Upper_class
| nicoburns wrote:
| > $People with 380k of income, but without significant
| assets are not upper class. They would be considered
| upper middle class.
|
| I mean sure, but anyone able to sustain that income level
| will quickly become wealthy unless they have ridiculously
| high spending levels.
| zymhan wrote:
| > then what is $20 million/yr?
|
| obscenely rich
| flomo wrote:
| Employee benefits like company-provided cars were way
| more common as it was a more favorable tax situation.
| thnujmikkkk wrote:
| source?
| [deleted]
| lend000 wrote:
| The top tax bracket in 1913, the first year of the federal
| income tax as it exists today, was equivalent to ~14 million
| dollars at today's value.
|
| Our wealth inequality problems could largely be solved by
| fixing the tax brackets (especially w.r.t. capital gains). We
| don't need all sorts of new taxes, certainly not a wealth tax,
| before fixing the obvious problem.
|
| That being said, $500,000 _should_ have been taxed more heavily
| in 1977 relative to today in a perfect world, because that
| amount of money was worth a lot more back then. I don 't think
| the numbers are inflation adjusted or it would make sense to do
| so without a big warning.
| gopi wrote:
| Yes, the marginal income taxes were high but the capital gain
| taxes were low, so the rich didn't pay much. For example when
| the top income tax was 91% in the 1950s the capital gain tax
| was just 25%. See the historical top income and capital gain
| tax rates here https://ctj.org/pdf/regcg.pdf
| jandrewrogers wrote:
| In the 1970s there were massive tax deductions that don't exist
| today, so the actual tax incidence was much lower than what is
| implied by the marginal tax rates.
|
| There was a major overhaul of the tax code in the 1980s that
| simultaneously eliminated many of the tax deductions and offset
| that loss of deductions with lower the marginal tax rates. The
| change was approximately revenue neutral but made the tax code
| simpler.
| m0llusk wrote:
| That was a complex situation. At that time the IRS did a lot
| of investigation and you had to be very rich and clever to
| really make tax cuts work. My father worked as an airline
| pilot in the 1970s and paid a 75% rate which made him
| irrational about taxes. What was most often done was not
| relying heavily on tax exemptions but rather on compensation
| packages where employees could have a company car and a
| company condo and make use of the company country club
| membership and so on.
| ajmurmann wrote:
| seems like this would render the website pretty useless for
| anything before that period, right?
| femiagbabiaka wrote:
| It's not useless, it's just data which needs context. Like
| the claim which GP makes that the Reagan tax reform was
| "revenue neutral" which is dubious at best.
| jandrewrogers wrote:
| Tax revenues grew monotonically across the tax reforms of
| the 1980s in smoothly boring fashion with no
| discontinuities. That is pretty much a textbook
| definition of "revenue neutral".
|
| Are you arguing that the tax revenue grew too quickly to
| be defined as "revenue neutral"?
|
| I'm not old enough to have experienced it but the data is
| _really_ obvious.
| taurath wrote:
| Would guess the idea is more about who pays that similar
| revenue, as since the 80s income inequality has shot
| upwards.
| tick_tock_tick wrote:
| I mean since we are talking Federal income tax the bottom
| 50% basically doesn't pay that.
| galangalalgol wrote:
| Since the distribution is exponential, removing the top
| tax bracket and raising the rest a little would be
| revenue neutral, but exacerbate wealth inequality. Not
| arguing if thats fair or not, just that you can make
| policies revenue neutral while still favoring the ultra
| wealthy.
| closeparen wrote:
| It would exacerbate income inequality. It would favor
| higher-wage workers.
|
| Income and income taxes are irrelevant to the wealthy.
| Changes in wealth inequality are mostly changes in asset
| prices.
| ChrisLomont wrote:
| Except the Reagan cuts lowered taxes on the bottom 80%,
| and the top saw a small increase. See my other post with
| historical effective tax rates from the CBO.
| ChrisLomont wrote:
| It's easy enough to look up federal tax revenues during
| that period and see they were indeed revenue neutral.
| There's nothing dubious about it - it's trivial to check.
| m0llusk wrote:
| You are talking about revenue neutral at a population
| level. What matters to individuals is their own revenue.
| The impact of these changes on individuals varied a great
| deal. Many middle class lost valuable deductions while
| wealthy people saw their rate drop dramatically. There is
| absolutely nothing remotely neutral about any of that. So
| the only context where neutrality can be asserted is the
| same one where the statistician drowns in a lake that is
| an average of less than three feet deep.
| ChrisLomont wrote:
| >You are talking about revenue neutral at a population
| level.
|
| Yes, that is the econometric definition of revenue
| neutral tax changes. Of course most any change in tax
| structures will affect individuals, but that is nearly
| irrelevant (unless you never want a change to tax law).
|
| > while wealthy people saw their rate drop dramatically
|
| Have you looked up this claim with actual historical
| effective tax rate numbers? It's simply not true.
|
| Here's [1] CBO total effective tax rates across many
| income level, from 1979 to 2005. Look at Table 1, then
| Total Effective Rate (which is what each group actually
| paid). Take, for example, Reagan tax cut of 1986, and
| pick a window around it, saw 1984 to 1987. Top 0.01
| effective rate _increased_ from 31.8 to 33.9. Lowest
| quintile rate decreased from 10.2 to 8.7.
|
| In fact, for the 1986 cut, the lowest 4 quintiles saw a
| slight tax decrease, the top quintile saw a tax increase.
|
| Next, look through the individual income tax rates -
| again, the same. After the Reagan tax cut in 1986, the
| top 0.01% saw an increase in effective rates - higher
| than any from 1979 (start of the dataset) through 87.
|
| Here too you see the bottom 80% ending up with lower tax
| rates across the board.
|
| I don't know where you got the idea rates dropped
| dramatically. It's not in this data.
|
| [1] https://www.cbo.gov/sites/default/files/110th-
| congress-2007-...
| pjc50 wrote:
| The Reagan change probably _was_ revenue neutral, but
| also changed tax incidence and its distribution across
| classes a lot.
| sieabahlpark wrote:
| hammock wrote:
| What were the biggest deductions that don't exist today?
| ameister14 wrote:
| So there were a few.
|
| One of the biggest was that there was an investment tax
| credit of 7% in the 60's and 10% in the 70's, which I
| believe was uncapped. I think those were also able to be
| rolled over to cover multiple years. That means that if you
| invested enough, you could pay essentially no taxes. This
| was repealed in 1986.
|
| [edit] Another that I should probably mention is the
| treatment of asset depreciation; in the 1960's and 70's the
| government was incredibly generous with regards to asset
| depreciation. For example, they allowed more rapid
| depreciation so you can have assets fully depreciated while
| still within their useful life and potentially if you sold
| those would pay capital gains tax on them, meaning you
| reaped significant tax savings over the asset's lifetime.
| PopAlongKid wrote:
| >[edit] Another that I should probably mention is the
| treatment of asset depreciation; in the 1960's and 70's
| the government was incredibly generous with regards to
| asset depreciation.
|
| That is pretty much how it is today as well. 100% bonus
| depreciation, Sec. 179, and the safe harbor for writing
| off pretty much any item under $2,500 as an expense, are
| all in place currently, and the favorable treatment of
| subsequent gain from sale is still there too.
| ameister14 wrote:
| I think 62-21's creation of broad industry
| classifications expanded rates of depreciation for a wide
| variety of assets, though; I'm pretty sure that was re-
| structured in the 80's, not sure if it was part of the
| 1986 Tax regulations but likely around that time.
| khuey wrote:
| On the individual side, all personal interest (e.g. credit
| card interest) was deductible and you could claim
| dependents (and their corresponding deductions) without any
| evidence (like a child's social security number).
| themitigating wrote:
| The second deduction you mention is just tax fraud. If
| they didn't have stringent checks that doesn't make it a
| valid deduction compared to today
| HWR_14 wrote:
| The second one isn't a deduction, it was inadequate fraud
| and tax evasion detection. It's like saying that the tax
| rates didn't matter back then because you were a child
| and therefore paid no tax.
| throwaway0a5e wrote:
| Regardless, in aggregate it means the effective rate was
| lower.
|
| If the subway costs $1 and 50% of the jump the turn-style
| 50% of the time the cost to ride the subway in aggregate
| is $0.75
|
| Sure, if you take some asinine ideological hard line
| about the goodness or badness of taxation you'll probably
| get your panties in a knot but if you look at it from the
| perspective of who's spending money in the economy a
| little bit of broadly applied fraud and a little bit of
| tax reduction are the same thing because they shuffle
| money around in the same manner.
| JackFr wrote:
| > asinine ideological
|
| Sometimes called "principled"
| throwaway0a5e wrote:
| It may be derived from principal but that does not change
| the fact that pretty much any take that's out there on
| either extreme (in this case "taxation is theft" on one
| side and "taxes are inherently good" on the other) is
| going to be regarded as asinine by the bulk of the
| population. Do you disagree?
| HWR_14 wrote:
| No. I'm willing to stand that the majority of the
| population will agree that outright lying about numbers
| on your tax forms to "lower your bill" is wrong.
| HWR_14 wrote:
| > If the subway costs $1 and 50% of the jump the turn-
| style 50% of the time the cost to ride the subway in
| aggregate is $0.75
|
| No, you have jumpers whose aggregate cost is $0.50 and
| non-jumpers whose aggregate cost is $1.00. The revenues
| realized are $0.75 a ride, but the costs aren't
| distributed evenly. If the jumpers were caught, then the
| cost could decline to $0.75, the nonjumpers would pay
| less and the jumpers would pay more. That world is better
| for the half of the population that doesn't jump.
| wil421 wrote:
| People can still claim children without any evidence. I
| worked with a cook who claimed like 6 or 7 kids. He
| _never_ filed taxes at the end of the year so he didn't
| need a SSN for them.
| hnburnsy wrote:
| Might be missing out on EITC where the federal government
| would pay him (negative tax rate)
| cupofpython wrote:
| this is just called tax evasion
|
| back then you could file your taxes with 6 or 7 kids and
| no one would check
|
| that is not the same as claiming you have 6 or 7 kids
| that will be filed on your taxes and then just never
| filing it. Once filed he would need SSN for those kids,
| or he would owe taxes
| Melatonic wrote:
| Do you mean are the brackets themselves tax adjusted or the
| salaries? Because lets say there is a 300-500k bracket right
| now - that bracket (if it even existed in the 70s) would have
| been much, much higher.
| Nition wrote:
| Agreed in principle, but I think you mean much lower?
| pjc50 wrote:
| I would _not_ expect this to cope with inflation but to operate
| purely on nominal values; after all, that 's what you'd put in
| the tax returns for those years.
| ren_engineer wrote:
| as others stated there were a lot more loopholes
|
| the other thing people don't mention is that companies got
| around higher tax rates by giving benefits like company cars
| and other things to entice employees when giving a higher
| salary would be stupid due to high tax rates. This is how
| things like health insurance ended up getting tied to
| employment, always unintended consequences
| sharkmerry wrote:
| It actually wasnt taxes with health insurance. They froze
| wages during ww2 but exempted health insurance from the cap.
|
| Same result. different cause (in this case)
| calvinmorrison wrote:
| I was going to bring this up! good call out
| emmelaich wrote:
| I wonder whether it would be easier to get Fortran in the browser
| with f2c (http://www.netlib.org/f2c/) then C to WASM.
|
| I had excellent results with f2c on an old Fortran program when I
| used it.
| tmm1 wrote:
| Thanks for sharing this! I tried it and indeed it works quite
| well.
|
| This will be much simpler/easier than gfortran+dragonegg, and
| removes some roadblocks preventing me from using the latest
| emscripten/llvm.
| MaxGhenis wrote:
| Fantastic job making taxsim more accessible! We've built an open-
| source version of taxsim called OpenFisca US [1] which we expose
| in our (also open-source) web app, PolicyEngine US [2]. We
| haven't yet implemented all of taxsim--we only have the most
| recent couple of years, and not all states--but we have some
| advantages like implementing means-tested benefits and being able
| to simulate custom tax and benefit reforms, both on individuals
| and the population (e.g. the budgetary and poverty impacts).
|
| I'd love to get in touch. Will email you from
| max@policyengine.org.
|
| [1] https://github.com/policyengine/openfisca-us
|
| [2] https://policyengine.org/us
| nomilk wrote:
| This looks great. Some quick examples of how to use it in the
| readme would give users a quick and easy way of exploring what
| it can do.
| MaxGhenis wrote:
| Thanks for the suggestion, I added a link to our
| documentation (https://openfisca.us) to the readme.
| divbzero wrote:
| This is great. I would also love to see a graph of the federal
| tax over time from 1960 to today.
| refurb wrote:
| Didn't take a close look but the 1986 (?) tax code update close
| major tax avoidance pathways (passive loses and tax shelters in
| wiki link).
|
| I think one issue with calculators like this is it doesn't
| account for excluding revenue that now has to be included.
|
| https://en.m.wikipedia.org/wiki/Tax_Reform_Act_of_1986
| idomi wrote:
| How is this different than turbotax for instance?
| madsbuch wrote:
| As a Danish person, it is a fun tool to play around with!
| Discovering that the tax difference between the US and Denmark is
| close to negligible is interesting as we have been known to have
| a high tax burden in Denmark.
| FullyFunctional wrote:
| That's brilliant work, thanks!
|
| Imagine if IRS would produce something like this (open sourced)
| and we could file our returns like this.
| runlevel1 wrote:
| NBER's biggest contributors are the US government. Ironically,
| the IRS isn't one of them.[1]
|
| As an aside, I'd love to see US gov research grants start
| requiring the work product to be made open source.
|
| [1]: https://www.nber.org/about-nber/support-funding
| MaxGhenis wrote:
| Agreed. We're building an open source version of taxsim (plus
| benefit rules) at https://github.com/policyengine/openfisca-
| us.
| HWR_14 wrote:
| Congress won't let the IRS do it. To avoid that, Turbo Tax and
| the others promised to give free filing software out. That it
| didn't have all the deductions (pay for that) and was filled
| with anti-patterns to get people to sign up was something
| Congress ignored.
|
| I assume there were also some campaign contributions that
| changed hands.
| ErikVandeWater wrote:
| The IRS can already calculate your taxes for you. In other
| countries you just have to confirm what the revenue department
| calculates as your liability and hit "submit". You have to do
| the calculations yourself because TurboTax et al., and
| accountants lobbied so taxes are complicated and must be
| completed by the filer (or their accountant).
| tmm1 wrote:
| From the abstract of NBER paper I mentioned [1]:
|
| > Each year Americans spend over two billion hours and $30
| billion preparing individual tax returns, and these filing
| costs are regressive. To lower and redistribute the filing
| burden, some commentators have proposed having the IRS pre-
| populate tax returns for individuals. We evaluate this
| hypothetical policy using a large, nationally representative
| sample of returns filed for the tax year 2019. Our baseline
| results indicate that between 62 and 73 million returns (41
| to 48 percent of all returns) could be accurately pre-
| populated using only current-year information returns and the
| prior-year return. Accuracy rates decline with income and are
| higher for taxpayers who have fewer dependents or are
| unmarried. We also examine 2019 non-filers, finding that pre-
| populated returns tentatively indicate $9.0 billion in
| refunds due to 12 million (22 percent) of them.
|
| [1] https://www.nber.org/system/files/working_papers/w30008/w
| 300...
| sokoloff wrote:
| One problem is that information is not tabulated by the IRS
| in time for a mid-April return date.
|
| Order your tax "transcript of account" in late March and
| again in late August. It'll be substantially more complete
| in late August.
| FullyFunctional wrote:
| I didn't point that out: I originate from a country in which
| I used to get a postcard summarizing what they thought I owed
| with a "Yes, I agree" checkbox and a field to sign. You could
| always file an extensive return if desired, but unless you
| had complicated (notably international) transactions, the
| return was basically accurate.
|
| This only works because there's a high level of trust in the
| government and low corruption, and having detailed tracking
| isn't (very) controversial. The US is almost the exact
| opposite on every metric so it wouldn't work for it.
| pessimizer wrote:
| The US demands extremely detailed tracking of your income.
| We just get nothing in return for it.
| PopAlongKid wrote:
| >We just get nothing in return for it.
|
| Maybe you don't, but a lot of wealthy people who can
| afford to hire tax professionals do. For example, how
| certain famous billionaires[0] have received billions of
| tax free income because they took the position that it
| could be classified as a certain type of income.
|
| [0]https://www.bloomberg.com/news/articles/2021-06-24/pet
| er-thi...
| [deleted]
| ac29 wrote:
| > The IRS can already calculate your taxes for you
|
| Only if 100% of your income is reported to the IRS. Small
| amounts (under $600) often aren't, and while you might be
| able to get away with not reporting it, its obviously not
| legal. I had some slightly unusual small sources of income
| the past couple of years that I had to keep records of,
| report, and pay taxes on.
|
| Granted, a lot of people arent going to have much more than a
| W2 and maybe some interest income.
| Melatonic wrote:
| As much as I hate doing it now the first few years I did my
| taxes I went all paper and it really helped give me a
| foundational understanding of it all. Especially when you
| make that one typo.
| analog31 wrote:
| Imagine if the tax code itself were written in Python.
| def computeTax(**kwargs): .. blah blah ..
| return how_much_you_owe
|
| Of course we all know what comes next... from
| scipy.optimize import minimize
| tmm1 wrote:
| In 2014, the Policy Simulation Library [1] added a model
| called Tax-Simulator [2], which is a Python reimplementation
| of TAXSIM [3][4]. It is available as open-source [5], and
| designed to let researchers both change existing policy
| variables and implement new tax reforms in Python.
|
| [1] https://pslmodels.org/
|
| [2] https://taxcalc.pslmodels.org/
|
| [3] https://taxcalc.pslmodels.org/about/history.html
|
| [4] https://github.com/PSLmodels/Tax-
| Calculator/blob/master/taxc...
|
| [5] https://github.com/PSLmodels/Tax-Calculator
| runlevel1 wrote:
| `policy_current_law.json` is really interesting:
|
| https://github.com/PSLmodels/Tax-
| Calculator/blob/master/taxc...
|
| Looks like the data in there goes back to 2013/2014. I'd
| love to see older historical policy data.
| fsflyer wrote:
| France has an open source implementation of their tax code
| [0]. The paper [1] gives an overview of the implementation
| language, mlang.
|
| [0] https://github.com/MLanguage/mlang [1]
| https://arxiv.org/abs/2011.07966
| MaxGhenis wrote:
| France has also developed the OpenFisca framework [1] for
| tax and benefit rules as code, and its OpenFisca France
| [2] model is widely used (I think significantly more than
| mlang). We've extended it to the UK [3] and the US [4].
|
| [1] https://openfisca.org
|
| [2] https://github.com/openfisca/openfisca-france
|
| [3] https://github.com/policyengine/openfisca-uk
|
| [4] https://github.com/policyengine/openfisca-us
| MaxGhenis wrote:
| My team at PolicyEngine [1] is also now further
| reimplementing Tax-Calculator in the Python-based OpenFisca
| framework [2]. OpenFisca US [3] includes all tax logic in
| Tax-Calculator, plus many means-tested benefit programs
| like SNAP, and some state tax logic (currently only
| Massachusetts is complete, though we'll finish the country
| in the next 12-18 months). You can try it in our
| PolicyEngine US web app [4].
|
| (OpenFisca US is part of the Policy Simulation Library, and
| it's developed by a number of former Tax-Calculator
| developers, myself included.)
|
| [1] https://policyengine.org
|
| [2] https://openfisca.org
|
| [3] https://github.com/policyengine/openfisca-us
|
| [4] https://policyengine.org/us
| PopAlongKid wrote:
| It has been proposed in professional tax forums that this is
| in fact how tax code should be legislated, using some kind of
| pseudo-code. Even just using symbols for things such as >=,
| <, and so on would eliminate a lot of the garbage in the
| verbal version.
| philsnow wrote:
| This would be incredible -- it feels like the tax form
| documentation is written in a dialect of Accounting English
| from the 50s, and just little things like adding some
| parentheses to group and/or con/disjunctions would go a
| long ways.
|
| Nearly every year I don't feel confident that I've filled
| out my taxes accurately, and it's not for lack of trying.
| forrestthewoods wrote:
| This is great. Could you add a box that displays effective tax
| rate and marginal rate?
|
| It would also be great to provide a line graph that shows the
| result for all years. There's no reason to have to select each
| year one-by-one.
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