Output

Supplied with alternative tax policy parameters, the Tax Module re-calculates tax liabilities and produces two versions of this counterfactual. First, the Tax Module calculates a purely static version, wherein taxpayers do not alter their behavior in response to tax changes and only optimize taxes by claiming deductions and credits that minimize their liability. The Tax Module then produces a second version that allows for micro-dynamic behavioral responses, described here.

The Tax Module produces three main types of outputs. First, calendar year liabilities across individuals, businesses, and estates are aggregates into fiscal year revenue projections. Second, it outputs distributional tables measuring how tax units are affected by policy changes. These tables present multiple distributional measures including average tax liability changes, the percent change in after-tax income, the share of taxpayers with a tax hike or cut, and the change in the share of federal taxes paid by income group. Third, the Tax Module calculates a number of effective tax rate measures used by PWBM’s dynamic OLG model; see this page for more details.