A Tax Benefit Model is a computer program that calculates the effects of possible changes to the fiscal system, for example tax increases or cash benefit reforms.
We take a dataset with information on incomes, demographics, spending, etc. for a representative sample of households. The model loops over the households in the dataset, calculating for each one how much tax the household members are liable for, and how much they are due in benefits. If the sample dataset is representative of the population, and the modelling sufficiently accurate, the model can then tell you what the effects of some tax change or benefit reform would be: the total cost, the how many people would be made better or worse off, the effective tax rates faced by different individuals, how many households are taken in and out of poverty, whether inequality is increased or lessened, and much else.
This is a Tax Benefit Model for Scotland. To my knowledge, this is the first model specifically built for Scotland, and the first fully Open Source one anywhere. It is designed to use data from the Family Resources Survey, possibly augmented by other datasets later on.
Here's some initial output from the model:
- A simple Scottish Budget Simulator - you, too, can be Kate Forbes;
- Exploring Basic Incomes - designing a workable UBI is harder than you might think;
- Budget Constraints - the often weird relationship between how much you earn and how much you end up with.
For more information, try the following:
- I've started a blog about the model. Pretty much stream of consciousness stuff as I write the model;
- A short course on the ideas behind the model, originally written for the UK's Open University;
- .. the course includes an interactive section, using a very preliminary demo version of the model -
- .. also a section on Budget Constraints;
- some Julia registered packages I've written containing model components:
- A generator for budget constraints;
- Routines for survey data weighting;
- Various standard measures of poverty & inequality.
