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Program scf_taxsim_main.do

This program reads 1989 through 2019 Survey of Consumer Finances (SCF) data 
sets and produces a multi-year tax units file. The file is then processed using 
the NBER TAXSIM program (version 32; https://users.nber.org/~taxsim/) which 
computes and returns estimated tax liabilities. 

The program draws heavily on a SAS program developed at the Federal Reserve 
Board by Kevin B. Moore (taxsimpub_taxunits.sas). 

To run the program, users must install the Stata TAXSIM connection by running:

ssc install taxsim32

Note: 1989 and 1992 results are not directly comparable to later years because
of changes in survey variables. Although the program processes 1989 and 1992,
there are unresolved anomalies because of missing variables in those survey 
years. The TAXSIM call at the end of the program does not include 1989 and 1992
in this production version of the program. 
 
For questions about the program,please contact:
 Swati Joshi (sjoshi@brookings.edu)
 John Sabelhaus (jsabelhaus@gmail.com) 
 
Development of this Stata program and accopanying documentation was generously
supported by a grant from the Peterson Foundation.
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clear all
set more off,perm
do set_file_paths

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Program Flow

1.  Read and save tax parameter and itemized deductions Excel input files. 
2.  Read and merge SCF core and Bulletin data sets.
3.  Implement preemptive data fixes and household variable construction. 
4.  Construct labor and pension incomes for respondent (R) and spouse (SP).
5.  Construct SCF family demographic variables.
6.  Construct non-primary economic unit (NPEU) incomes and identify NPEU filers.
7.  Initialize measures of possible tax filing dependency.
8.  Compute observed itemizable expenses, impute missing expenses.
9.  Choose between one or two tax units for respondent (R) and spouse (SP).
10. Add tax unit records to main data set when R, SP do not file jointly.
11. Set initial filing status to single or married in order to split incomes.
12. Construct and allocate incomes across joint, R, and SP tax units
    (Drop SCF core variables here to save space)
13. Create tax unit records and process incomes for NPEU filers.
14. Compute total income for comparison to IRS tax filing thresholds.
15. Flag filers versus non-filers, drop non-filer records.  
16. Allocate dependents and set filing status across all tax units.
17. Compute adjustments to taxable income.
18. Assign itemizable expenses to appropriate tax unit.
19. Choose between standard and itemized deductions.
20. Adjust SCF incomes for disclosure and SOI consistency
21. Construct TAXSIM input dataset.
22. Keep TAXSIM input variables, save input data set
23. Call TAXSIM and merge results back onto TAXSIM input data set.
24. Write merged SCF/TAXSIM results to main results Excel file. 
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TAXSIM v32 Input Variables and Definitions

1. taxsimid   		Case ID (arbitrary,but must be a non-negative numeric). 
2. year 			Tax year ending December 31st.
3. state 			SOI state codes (1 to 51),0=> no state calculation.
4. mstat 			Marital status (1=single or head of household,2=married
					filing jointly,6=married filing separately,8=dependent).
5. page 			Age of primary taxpayer.
6. sage 			Age of spouse (0 if no spouse).
7. depx 			Number of dependents (personal exemptions).
8. dep13 			Number of children under 13 with eligible child care
					expenses (Dependent Care Credit).
9. dep17 			Number of children under 17 entire tax year (Child Credit).
10. dep18 			Number of qualifying children for EITC (under 18 or under
					24 and qualifying student).
11. pwages 			Wage and salary,primary taxpayer (include self-employment
					but not Qualified Business Income).
12. swages 			Wage and salary,spouse (include self-employment but not 
					Qualified Business Income).
13. dividends		Dividend income (qualified dividends for 2003 and later).
14. intrec 			Interest received.
15. stcg 			Short term capital gains or losses (+/-).
16. ltcg 			Long term capital gains or losses (+/-).
17. otherprop 		Other property income subvject to NIIT (define NIIT,fill in)
18. nonprop 		Other non-property income not subject to NIIT (fill in).
19. pensions 		Taxable pensions and IRA distributions.
20. gssi 			Gross Social Security benefits. 
21. ui 				Unemployment compensation received.
22. transfers 		Other non taxable transfer income (welfare,workers
					compensation,veterans benefits,child support; for state 
					return).
23. rentpaid 		Rent paid (for state return).
24. proptax 		Real estate taxes paid (preference for AMT; for state 
					property tax rebates).
25. otheritem		Other itemized (other state and local taxes line 8 of 
					Schedule A,local income tax,perference share of medical,
					miscellaneous on line 27 of Schedule A; preference for AMT)
26. childcare 		Child care expenses. 
27. mortgage 		Itemized deductions NOT counted in otheritem (#25).
					Includes Schedule A deductible medical not in line 16,
					motor vehicle taxes line 7,home mortgage interest line 15,
					charitable contributions line 19,casulaty or theft losses;
					line 20). 
28. scorp 			Active S-Corp income (for SSTB,Specialized Service Trade 
					or Business income).
29. pbusinc 		Primary taxpayer Qualified Business Income (QBI) eligible
					for preferential rate without phase-out and assuming 
					sufficient wages and capital,subject to SECA and Medicare
					additional earnings tax. 
30. pprofinc 		Primary taxpayer SSTB eligible for preferential rate 
					subject to clawback,subject to SECA and Medicare 
					additional earnings tax.
31. sbusinc 		Spouse version of QBI (pbusinc,#29)
32. sprofinc		Spouse version of SSTB (pprofinc,#30)
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1.  Read and save tax parameter and itemized deductions Excel input files

Tax Parameter Definitions

syear 	 	survey year
tyear 	 	tax year,usually survey year-1,but could change to use tax
			laws from different years 
wyear 		qualified widower year,usually tyear-2
itdlim1 	AGI limit for itemized deductions for single,joint,
			widower,and head of household filers
itdlim2 	AGI limit for itemized deductions for married,filing
			separately filers
itdl10 		itemized deduction worksheet line 10 divisor
expamt 		personal exemption amount
expamt2 	personal exemption amount if residual above AGI threshold
exdl9 		personal exemption worksheet line 9 divisor
expagit1 	residual AGI threshold for single,joint,widower,and head
			of household filers
expagit2 	residual AGI threshold for married,filing separately filers
exlim1 		AGI limit for exemptions for single filers
exlim2 		AGI limit for exemptions for joint or widower filers
exlim3 		AGI limit for exemptions for married,filing separately filers
exlim4 		AGI limit for exemptions for head of household filers
stdamt1 	standard deduction amount for single filer or married filing
			separately,no age exemption
stdamt2 	standard deduction amount for single filer or married filing
			separately,one age exemption
stdamt3 	standard deduction amount for joint filer or widower,no age
			exemptions
stdamt4 	standard deduction amount for joint filer or widower,one age
			exemption
stdamt5 	standard deduction amount for joint filer,two age exemptions
stdamt6 	standard deduction amount for head of household filer,no age
			exemption
stdamt7 	standard deduction amount for head of household filer,one age
			exemption
filelim1 	filing threshold for single filers with no age exemption
filelim2 	filing threshold for single filers with one age exemption
filelim3 	filing threshold for joint filers with no age exemption
filelim4 	filing threshold for joint filers with one age exemption
filelim5 	filing threshold for joint filers with two age exemptions
filelim6 	filing threshold for married filing separately filers any age 
filelim7 	filing threshold for head of household filers with no age exemption
filelim8 	filing threshold for head of household filers with one age exemption
filelim9 	filing threshold for widower filers with no age exemption
filelim10 	filing threshold for widower filers with one age exemption
lcgagi1 	share of capital gains treated as long-term gains for filers
			with AGI < 50k
lclagi1 	share of capital losses treated as long-term losses for filers
			with AGI < 50k
lcgagi2 	share of capital gains treated as long-term gains for filers
			with 50k <= AGI < 100k
lclagi2 	share of capital losses treated as long-term losses for filers
			with 50k <= AGI < 100k
lcgagi3 	share of capital gains treated as long-term gains for filers
			with AGI >= 100k
lclagi3 	share of capital losses treated as long-term losses for filers
			with AGI >= 100k
paytax 		payroll tax rate,assuming employee pays both employer and
			employee share
medhi 		Medicare tax rate
ptlim 		annual payroll tax limit
htaxfile 	flag for including code to merge TAXSIM data into SCF data,
			set to NO by default,set to YES when you want merge TAXSIM data into
			the SCF data