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The need to generate accurate tax estimates led to an examination of the current methods of generating tax information and an exploration for more accurate methods of calculating tax liability. The current poverty measures are based on the March Supplement of the Current Population Survey (CPS). The CPS has a current tax model that was developed in the early 1980’s, but the model has a number of deficiencies as described below. The SIPP also collects tax information through an annual topical module administered shortly after the end of tax season. The topical module asks for detailed information on tax returns, but the response rates to many of the questions are too low to make the information useful.
Given the NAS recommendation and the necessity for a more accurate tax model, a new model was developed that would provide more detailed tax calculations. The model was developed to work with CPS and will work with SIPP after some data manipulation. This paper discusses the need for the tax model and the initial results from the model.
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WORKING PAPER
Supplemental Poverty Measure Working PapersSome content on this site is available in several different electronic formats. Some of the files may require a plug-in or additional software to view.
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