Split taxation of benefits for Social Security and Medicare

changelog_entry.yaml

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+- bump: minor
+  changes:
+    added:
+    - Social Security and Medicare HI revenue tracking variables that properly separate taxation of benefits (TOB) by trust fund allocation.

policyengine_us/parameters/gov/irs/social_security/taxability/revenue_allocation/tier_1_to_oasdi.yaml

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+description: Share of tier 1 Social Security benefit taxation revenue credited to OASDI trust funds
+metadata:
+  unit: /1
+  reference:
+    - title: 26 USC 86 - Social security and tier 1 railroad retirement benefits
+      href: https://www.law.cornell.edu/uscode/text/26/86
+values:
+  1984-01-01: 1.0

policyengine_us/parameters/gov/irs/social_security/taxability/revenue_allocation/tier_2_to_medicare.yaml

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+description: Share of tier 2 Social Security benefit taxation revenue credited to Medicare HI trust fund
+metadata:
+  unit: /1
+  reference:
+    - title: 26 USC 86 - Social security and tier 1 railroad retirement benefits
+      href: https://www.law.cornell.edu/uscode/text/26/86
+values:
+  1993-01-01: 1.0

policyengine_us/tests/policy/baseline/gov/ssa/revenue/medicare_hi_revenue.yaml

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+- name: Total Medicare revenue - worker with no benefits
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Only payroll tax, no TOB
+    # Payroll = 50_000 * 0.029 = 1_450
+    medicare_hi_revenue: 1_450
+
+- name: Total Medicare revenue - high earner above additional threshold
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 250_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Payroll = 7_700 (from payroll test)
+    medicare_hi_revenue: 7_700
+
+- name: Total Medicare revenue - retiree with high SS and income
+  period: 2024
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 30_000
+        employment_income: 60_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Payroll = 60_000 * 0.029 = 1_740
+    # TOB tier 2 revenue ≈ 3_113
+    # Total ≈ 4_853
+    medicare_hi_revenue: 4_853
+
+- name: Total Medicare revenue - zero income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 0
+        employment_income: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    medicare_hi_revenue: 0

policyengine_us/tests/policy/baseline/gov/ssa/revenue/payroll_tax_revenue_medicare.yaml

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+- name: Medicare payroll tax revenue - zero earnings
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 0
+    households:
+      household:
+        members: [person1]
+  output:
+    payroll_tax_revenue_medicare: 0
+
+- name: Medicare payroll tax revenue - standard earnings
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Employee + employer Medicare tax
+    # Rate = 1.45% + 1.45% = 2.9%
+    # Revenue = 50_000 * 0.029 = 1_450
+    payroll_tax_revenue_medicare: 1_450
+
+- name: Medicare payroll tax revenue - above additional threshold
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 250_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Regular Medicare: 250_000 * 0.029 = 7_250
+    # Additional Medicare (employee only): (250_000 - 200_000) * 0.009 = 450
+    # Total = 7_250 + 450 = 7_700
+    payroll_tax_revenue_medicare: 7_700

policyengine_us/tests/policy/baseline/gov/ssa/revenue/payroll_tax_revenue_social_security.yaml

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+- name: SS payroll tax revenue - zero earnings
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 0
+    households:
+      household:
+        members: [person1]
+  output:
+    payroll_tax_revenue_social_security: 0
+
+- name: SS payroll tax revenue - standard earnings
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 50_000
+    households:
+      household:
+        members: [person1]
+  output:
+    # Employee + employer SS tax
+    # Rate = 6.2% + 6.2% = 12.4%
+    # Revenue = 50_000 * 0.124 = 6_200
+    payroll_tax_revenue_social_security: 6_200
+
+- name: SS payroll tax revenue - above wage base
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 200_000
+    households:
+      household:
+        members: [person1]
+  output:
+    # 2024 wage base = 168_600
+    # Revenue = 168_600 * 0.124 = 20_906.40
+    payroll_tax_revenue_social_security: 20_906.40

policyengine_us/tests/policy/baseline/gov/ssa/revenue/social_security_revenue.yaml

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+- name: Total SS revenue - worker with no benefits
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Only payroll tax, no TOB
+    # Payroll = 50_000 * 0.124 = 6_200
+    social_security_revenue: 6_200
+
+- name: Total SS revenue - retiree with benefits and income
+  period: 2024
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 20_000
+        employment_income: 30_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Payroll = 30_000 * 0.124 = 3_720
+    # TOB ≈ 495 (from TOB test)
+    # Total ≈ 4_215
+    social_security_revenue: 4_215
+
+- name: Total SS revenue - zero income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 0
+        employment_income: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    social_security_revenue: 0

policyengine_us/tests/policy/baseline/gov/ssa/revenue/taxable_social_security_tier_1.yaml

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+- name: Tier 1 - zero income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    taxable_social_security_tier_1: 0
+
+- name: Tier 1 - below base threshold
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 20_000
+        employment_income: 0
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Combined income = 0 + 0.5 * 20_000 = 10_000
+    # Base threshold for SINGLE = 25_000
+    # 10_000 < 25_000, so tier 1 = 0
+    taxable_social_security_tier_1: 0
+
+- name: Tier 1 - between base and adjusted base
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 20_000
+        employment_income: 20_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Combined income = 20_000 + 0.5 * 20_000 = 30_000
+    # Base threshold = 25_000, adjusted base = 34_000
+    # Excess over base = 30_000 - 25_000 = 5_000
+    # Tier 1 = min(0.5 * 20_000, 0.5 * 5_000) = min(10_000, 2_500) = 2_500
+    taxable_social_security_tier_1: 2_500
+
+- name: Tier 1 - above adjusted base
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 30_000
+        employment_income: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+        filing_status: SINGLE
+    households:
+      household:
+        members: [person1]
+  output:
+    # Combined income = 50_000 + 0.5 * 30_000 = 65_000
+    # Base = 25_000, adjusted base = 34_000
+    # Over adjusted base, so tier 1 = bracket amount
+    # Bracket amount = min(amount_under_paragraph_1, 0.5 * (34_000 - 25_000))
+    # amount_under_paragraph_1 = min(0.5 * 30_000, 0.5 * (65_000 - 25_000))
+    #                           = min(15_000, 20_000) = 15_000
+    # Bracket amount = min(15_000, 0.5 * 9_000) = min(15_000, 4_500) = 4_500
+    taxable_social_security_tier_1: 4_500
+
+- name: Tier 1 - joint filing with high income
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 67
+        social_security: 40_000
+        employment_income: 60_000
+      person2:
+        age: 65
+        social_security: 20_000
+        employment_income: 40_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    marital_units:
+      marital_unit:
+        members: [person1, person2]
+        marital_unit_id: 0
+    households:
+      household:
+        members: [person1, person2]
+  output:
+    # Combined income = 100_000 + 0.5 * 60_000 = 130_000
+    # Base for JOINT = 32_000, adjusted base = 44_000
+    # Over adjusted base
+    # Excess over base = 130_000 - 32_000 = 98_000
+    # amount_under_paragraph_1 = min(0.5 * 60_000, 0.5 * 98_000)
+    #                           = min(30_000, 49_000) = 30_000
+    # Bracket amount = min(30_000, 0.5 * (44_000 - 32_000))
+    #                = min(30_000, 6_000) = 6_000
+    taxable_social_security_tier_1: 6_000