{"action":"created","issue":{"url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/975","repository_url":"https://api.github.com/repos/open-source-economics/Tax-Calculator","labels_url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/975/labels{/name}","comments_url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/975/comments","events_url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/975/events","html_url":"https://github.com/open-source-economics/Tax-Calculator/pull/975","id":181851478,"number":975,"title":"Extend no-different tax treatment of LTCG+QDIV income to AMT","user":{"login":"martinholmer","id":12170745,"avatar_url":"https://avatars.githubusercontent.com/u/12170745?v=3","gravatar_id":"","url":"https://api.github.com/users/martinholmer","html_url":"https://github.com/martinholmer","followers_url":"https://api.github.com/users/martinholmer/followers","following_url":"https://api.github.com/users/martinholmer/following{/other_user}","gists_url":"https://api.github.com/users/martinholmer/gists{/gist_id}","starred_url":"https://api.github.com/users/martinholmer/starred{/owner}{/repo}","subscriptions_url":"https://api.github.com/users/martinholmer/subscriptions","organizations_url":"https://api.github.com/users/martinholmer/orgs","repos_url":"https://api.github.com/users/martinholmer/repos","events_url":"https://api.github.com/users/martinholmer/events{/privacy}","received_events_url":"https://api.github.com/users/martinholmer/received_events","type":"User","site_admin":false},"labels":[{"url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/labels/in%20progress","name":"in progress","color":"ededed"}],"state":"closed","locked":false,"assignee":null,"assignees":[],"milestone":null,"comments":2,"created_at":"2016-10-08T22:09:51Z","updated_at":"2016-10-19T20:54:30Z","closed_at":"2016-10-19T20:54:30Z","pull_request":{"url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/pulls/975","html_url":"https://github.com/open-source-economics/Tax-Calculator/pull/975","diff_url":"https://github.com/open-source-economics/Tax-Calculator/pull/975.diff","patch_url":"https://github.com/open-source-economics/Tax-Calculator/pull/975.patch"},"body":"In merged pull request #973, Tax-Calculator logic was extended to allow LTCG+QDIV income to be taxed using the same regular tax brackets and rates as ordinary income (like wages and salaries).  In this pull request, the effect of the new #973 policy parameter (the name of which has been changed from `CG_as_II` to `_CG_nodiff`) has been extended to AMT logic.  Under current law, LTCG+QDIV income is taxed with different brackets and rates in both the regular tax and AMT calculations, and therefore, the current-law-policy value of the `_CG_nodiff` is zero (that is, false).  Changing the value of `_CG_nodiff` to one (that is, true) will cause both regular income tax and AMT logic to include LTCG+QDIV income along with other income in AGI and tax that combined income using the ordinary tax brackets and rates for regular taxes and AMT.  Note that these changes do not affect the role of LTCG+QDIV income in the calculation of NIIT or EITC.\r\n\r\nWe have conducted a simple test to show that the logic in this pull request seems to work as designed. \r\n\r\nConsider two individuals both sixty years old with no dependents, with $500,000 income and with $200,000 of AMT-preference itemized deductions.  The first of the two has only qualified dividend income, while the second has only wage and salary income.  Using `simtax.py` input format, the two individuals are as follows:\r\n```\r\n$ cat cases.in\r\n1 2015 0 1 0 6000 0 0 500000 0 0 0 0 0 0 200000 0 0 0 0 0 0\r\n2 2015 0 1 0 6000 500000 0 0 0 0 0 0 0 0 200000 0 0 0 0 0 0\r\n```\r\nWe specify a simple reform that eliminates the differential tax treatment of LTCG+QDIV income in a JSON reform file with the following contents:\r\n```\r\n$ cat same.json\r\n{\"_CG_nodiff\":{\"2015\":[1]}}\r\n```\r\nUnder current-law policy (which has a favorable differential tax treatment of LTCG+QDIV income), the individuals have the following tax liabilities:\r\n```\r\n$ python simtax.py cases.in \r\n$ awk '{print FILENAME,$1,$4,$26,$27,$28}' cases.in.out-simtax\r\ncases.in.out-simtax 1.  85122.50 500000.00  1260.00 72462.50\r\ncases.in.out-simtax 2. 136292.00 500000.00 51292.42 84999.58\r\n```\r\nThe first individual pays much less income tax than the second even though they both have AGI equal to $500,000.\r\n\r\nNext we simulate income tax liability for these two individuals under the `same.json` reform that eliminates the differential income tax treatment of LTCG+QDIV income.\r\n```\r\n$ python simtax.py cases.in --reform same.json\r\n$ awk '{print FILENAME,$1,$4,$26,$27,$28}' cases.in.out-simtax-same\r\ncases.in.out-simtax-same 1. 147692.00 0.00 500000.00 51292.42 84999.58\r\ncases.in.out-simtax-same 2. 136292.00 0.00 500000.00 51292.42 84999.58\r\n```\r\nNotice that now the first individual pays more tax than before (as expected given this reform) and that the AMT tax liability (that sum of output variables 27 and 28) are exactly the same: $136,292.  But then the question is why does the first individual owe a total income tax (output variable 4) that is $11,400 more than the second individual.  The answer is that the first individual owes an NIIT (net investment income tax) liability of that amount: `11400 = 0.038 * (500000 - 200000)`.\r\n\r\n@MattHJensen @feenberg @Amy-Xu @GoFroggyRun @andersonfrailey @codykallen \r\n"},"comment":{"url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/comments/254937815","html_url":"https://github.com/open-source-economics/Tax-Calculator/pull/975#issuecomment-254937815","issue_url":"https://api.github.com/repos/open-source-economics/Tax-Calculator/issues/975","id":254937815,"user":{"login":"martinholmer","id":12170745,"avatar_url":"https://avatars.githubusercontent.com/u/12170745?v=3","gravatar_id":"","url":"https://api.github.com/users/martinholmer","html_url":"https://github.com/martinholmer","followers_url":"https://api.github.com/users/martinholmer/followers","following_url":"https://api.github.com/users/martinholmer/following{/other_user}","gists_url":"https://api.github.com/users/martinholmer/gists{/gist_id}","starred_url":"https://api.github.com/users/martinholmer/starred{/owner}{/repo}","subscriptions_url":"https://api.github.com/users/martinholmer/subscriptions","organizations_url":"https://api.github.com/users/martinholmer/orgs","repos_url":"https://api.github.com/users/martinholmer/repos","events_url":"https://api.github.com/users/martinholmer/events{/privacy}","received_events_url":"https://api.github.com/users/martinholmer/received_events","type":"User","site_admin":false},"created_at":"2016-10-19T20:54:30Z","updated_at":"2016-10-19T20:54:30Z","body":"Pull request #975 is being closed (without being merged into the master branch) because of all the recent changes to the `AMT` function logic."}}
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