Fix and refactor AMT (#4815)

Author: PavelMakarchuk

changelog_entry.yaml

@@ -0,0 +1,5 @@
+- bump: patch
+  changes:
+    fixed:
+      - Refactor the alternative minimum tax files.
+      - Include capital gains tax in the final alternative minimum tax calculation.

policyengine_us/parameters/gov/irs/income/amt/brackets.yaml

@@ -1,57 +1,57 @@
-rates:
-  metadata:
-    unit: /1
-    reference:
-      - title: 26 U.S. Code § 55 - Alternative minimum tax imposed (b)(1)(A)
-        href: https://www.law.cornell.edu/uscode/text/26/55#b_1_A
-  1:
-    values:
+description: The IRS provides the following Alternative Minimum Tax (AMT) brackets.
+metadata:
+  type: marginal_rate
+  threshold_unit: currency-USD
+  rate_unit: /1
+  label: Alternative Minimum Tax brackets
+  reference:
+    - title: 26 U.S. Code § 55 - Alternative minimum tax imposed (b)(1)(A)
+      href: https://www.law.cornell.edu/uscode/text/26/55#b_1_A
+    - title: 2024 IRS data release
+      href: https://www.irs.gov/pub/irs-drop/rp-23-34.pdf#page=12
+    - title: 2023 IRS data release
+      href: https://www.irs.gov/pub/irs-drop/rp-22-38.pdf#page=12
+    - title: 2022 IRS data release
+      href: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf#page=12
+    - title: 2021 IRS data release
+      href: https://www.irs.gov/pub/irs-drop/rp-20-45.pdf#page=12
+    - title: 2020 IRS data release
+      href: https://www.irs.gov/pub/irs-drop/rp-19-44.pdf#page=12
+    - title: CBO Tax Parameters and Effective Marginal Tax Rates | Feb 2024
+      # 1. Tax Parameters.
+      href: https://www.cbo.gov/system/files/2024-02/53724-2024-02-Tax-Parameters.xlsx
+
+brackets:
+  - threshold:
+      2013-01-01: 0
+    rate:
       2013-01-01: 0.26
-  2:
-    values:
-      2013-01-01: 0.02
-thresholds:
-  description: AMT brackets (upper thresholds)
-  metadata:
-    unit: currency-USD
-    period: year
-    uprating: gov.irs.uprating
-    reference:
-      - title: 2024 IRS data release
-        href: https://www.irs.gov/pub/irs-drop/rp-23-34.pdf#page=12
-      - title: 2023 IRS data release
-        href: https://www.irs.gov/pub/irs-drop/rp-22-38.pdf#page=12
-      - title: 2022 IRS data release
-        href: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf#page=12
-      - title: 2021 IRS data release
-        href: https://www.irs.gov/pub/irs-drop/rp-20-45.pdf#page=12
-      - title: 2020 IRS data release
-        href: https://www.irs.gov/pub/irs-drop/rp-19-44.pdf#page=12
-      - title: CBO Tax Parameters and Effective Marginal Tax Rates | Feb 2024
-        # 1. Tax Parameters.
-        href: https://www.cbo.gov/system/files/2024-02/53724-2024-02-Tax-Parameters.xlsx
-  1:
-    values:
-      2013-01-01: 179_500
-      2014-01-01: 182_500
-      2015-01-01: 185_400
-      2016-01-01: 186_300
-      2017-01-01: 187_800
-      2018-01-01: 191_100
-      2019-01-01: 194_800
-      2020-01-01: 197_900
-      2021-01-01: 199_900
-      2022-01-01: 206_100
-      2023-01-01: 220_700
-      2024-01-01: 232_600
-      # CBO forecast.
-      2025-01-01: 238_500
-      2026-01-01: 243_800
-      2027-01-01: 248_800
-      2028-01-01: 253_700
-      2029-01-01: 258_600
-      2030-01-01: 263_700
-      2031-01-01: 268_900
-      2032-01-01: 274_300
-      2033-01-01: 279_700
-      2034-01-01: 285_300
+  - threshold:
+      values:
+        2013-01-01: 179_500
+        2014-01-01: 182_500
+        2015-01-01: 185_400
+        2016-01-01: 186_300
+        2017-01-01: 187_800
+        2018-01-01: 191_100
+        2019-01-01: 194_800
+        2020-01-01: 197_900
+        2021-01-01: 199_900
+        2022-01-01: 206_100
+        2023-01-01: 220_700
+        2024-01-01: 232_600
+        # CBO forecast.
+        2025-01-01: 238_500
+        2026-01-01: 243_800
+        2027-01-01: 248_800
+        2028-01-01: 253_700
+        2029-01-01: 258_600
+        2030-01-01: 263_700
+        2031-01-01: 268_900
+        2032-01-01: 274_300
+        2033-01-01: 279_700
+        2034-01-01: 285_300
+      metadata:
+        uprating: gov.irs.uprating
+    rate:
+      2013-01-01: 0.28

policyengine_us/tests/microsimulation/reforms/test_no_reform.py

@@ -0,0 +1,28 @@
+- name: Integration test - single filer with 150k employment income and 50k qualified dividend income as well as 50k long term capital gains
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    people:
+      person1:
+        age: 50
+        employment_income: 150_000
+        qualified_dividend_income: 50_000
+        long_term_capital_gains: 50_000
+    spm_units:
+      spm_unit:
+        members: [person1]
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: TX
+  output:
+    # expected output from online TAXSIM-35
+    # which is at: https://taxsim.nber.org/taxsim35/
+    alternative_minimum_tax: 0
+    adjusted_gross_income: 250_000
+    taxable_income: 237_050
+    net_investment_income_tax: 1_900
+    income_tax: 43_627.50

policyengine_us/tests/microsimulation/reforms/test_repeal_head_of_household.py

@@ -0,0 +1,17 @@
+- name: Itemizes
+  period: 2022
+  input:
+    tax_unit_itemizes: true
+    standard_deduction: 7_000
+    salt_deduction: 4_000
+  output:
+    amt_excluded_deductions: 4_000
+
+- name: Does not itemize 
+  period: 2022
+  input:
+    tax_unit_itemizes: false
+    standard_deduction: 7_000
+    salt_deduction: 4_000
+  output:
+    amt_excluded_deductions: 7_000

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/alternative_minimum_tax.yaml

@@ -0,0 +1,47 @@
+- name: Single filer, itemizing
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    tax_unit_itemizes: true
+    taxable_income: 10_000
+    standard_deduction: 1_000
+    salt_deduction: 2_000
+    filing_status: SINGLE
+  output:
+    amt_income: 12_000
+
+- name: Joint filers, do not itemize
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    tax_unit_itemizes: false
+    taxable_income: 10_000
+    standard_deduction: 1_000
+    salt_deduction: 2_000
+    filing_status: JOINT
+  output:
+    amt_income: 11_000
+
+- name: Separate filers, do not itemize, with separate addition
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    tax_unit_itemizes: false
+    taxable_income: 800_000
+    standard_deduction: 1_000
+    salt_deduction: 2_000
+    filing_status: SEPARATE
+  output:
+    amt_income: 807_225
+
+- name: Joint filers, do not itemize, without separate addition
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    tax_unit_itemizes: false
+    taxable_income: 800_000
+    standard_deduction: 1_000
+    salt_deduction: 2_000
+    filing_status: JOINT
+  output:
+    amt_income: 801_000

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/income/amt_excluded_deductions.yaml

@@ -0,0 +1,30 @@
+- name: Joint filers
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    taxable_income: 1_000_000
+    amt_excluded_deductions: 1_000
+    filing_status: JOINT
+  output:
+    amt_separate_addition: 0
+
+- name: Separate filer eligible for addition
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    taxable_income: 800_000
+    amt_excluded_deductions: 1_000
+    filing_status: SEPARATE
+  output:
+    amt_separate_addition: 6_225
+
+- name: Separate, income below limit
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    taxable_income: 700_000
+    amt_excluded_deductions: 1_000
+    filing_status: SEPARATE
+  output:
+    amt_separate_addition: 0
+  

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/income/amt_income.yaml

@@ -0,0 +1,9 @@
+- name: Baseline test, single filer with 10k of income
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+    taxable_income: 10_000
+    filing_status: SINGLE
+    income_tax_main_rates: 1_000
+  output:
+    regular_tax_before_credits: 1_000