The Complete Custom Income Tax Simulator
- Powerful tax-calculating engine customized with each state tax
- Taxpayer database for each state with tax, income, expenditure,
and wealth variables
- Five-year forecasts for what-if scenarios of adjusted
- Tools for designing a tax code to achieve desired impact on local
and regional constituents
- Detailed tax burden measures
American Economics Group, Inc.'s (AEG's) powerful income tax simulation
tool, helps state and municipal governments deal with the ever-changing
economic and political realities that affect personal income taxes.
There is nothing on the market like itSimTax is both a powerful
tax-calculating engine and a comprehensive database.
the Effect of Changes in Federal Taxes and the Economy
Since most states reference federal tax law, any change in national
tax policy could automatically change your state's taxes, often requiring
legislation to keep your tax policy on track. If federal taxes decline,
for example, states need to decide quickly and clearly how to adjust
their own tax codes to meet revenue targets or other policy goals.
enables AEG's clients to determine precisely how changes in the federal
tax code will affect income tax collections. Customized for each state,
SimTax comes pre-loaded with the formulas in your tax code and a database
weighted for all taxpayers. It allows you to change your state's tax
code in virtually any way and immediately see how those changes affect
collections, the distribution of taxpayer burdens, and incentives, credits,
and other tax devices.
your tax policy could be affected by changes in the economy such as
jobs, income, inflation, shifting political attitudes toward housing
policy, capital gains, and maximum tax rates and brackets. How has your
state's personal income tax changed over time? What is its burden on
households of different income levels? Does your tax code advance your
state's policies on home ownership, economic development, and low-income
safety nets? SimTax can help you investigate these and many other issues.
SimTax to our forecasting model, AEG enables you to examine the effects
of changes in tax policy on a wide range of industry groups and regional
stakeholderssuch as a state's largest employers, exporters, or employment-rich
industriesall in sync with the latest economic forecast.
Detailed Taxpayer and Household Information
SimTax contains a comprehensive database of taxpayers that goes way
beyond data you may now collect from tax returns. Each household record
in the database contains a long list of variables encompassing household
composition, income, expenditure, asset, debt, and tax items.
composition variables: earners, dependents, ages, medical status, filing
status, school status.
- Income variables: wages, interest, dividends, rent, royalties, gains,
pensions, transfers, and business income.
- Expenditure variables: categories and subcategories of food, shelter,
clothing, health, and transportation.
- Asset variables: categories of stocks, bonds, mutual funds, mortgages,
cash, and other instruments.
- Debt variables: mortgages and various categories of other loans.
- Tax variables: complete tax form details for filings under current
law and items that can be changed during a simulation.
Full Tax Returns
Another unique feature of SimTax is its use of household
variables to calculate full tax returns, even when taxpayers file a
short form return. By using pre-loaded formulas and decision modeling,
SimTax proceeds through the database, automatically constructing custom
variable data. During this process, the software steps through each
household, applying tax formulas to the data elements in each record,
including both original and custom data. For each household, the calculator
completes a virtual tax return, making choices appropriate to the household's
situation and applying probabilities consistent with the patterns of
actual taxpayers. At the end of a full run, it adds complete tax return
items (and other requested information) to each household record.
After a run you can
use these full records to produce tables, graphs, cross-tabulations,
and analysis. You can also compare the returns with previous runs to
identify the winners and losers after a tax change. Each household record
has a weight variable that tells how many households in the state it
represents. When producing reports, SimTax takes the weight into account
to adjust the numbers to cover all taxpayers in the state. So each report's
data represent the entire state and non-resident filers, not just the
households in the database.
Negotiate Tax Proposals
SimTax can also re-weight taxpayer data to match other estimates from,
for example, the governor's office, a legislative body, or a political
party, which can help you in tax negotiations. When someone proposes
a tax change and produces estimates of that change, you can automatically
re-weight the database to target the results to hit their estimates
under current law. You can then test the validity of the proposed changes
in law against the benchmark of that estimate. This gives you a common
basis for negotiating changes in the proposal or suggesting a counter-proposal.
Income Taxes Five Years Ahead
AEG's detailed regional and state economic forecasts can automatically
drive SimTax. By linking them, you can project tax results for five
future years, using our assumptions or inputting your own. Taxpayer
income, deductions, and other tax items adjust over time consistently
with the AEG economic forecast for your state. The result is a solid
five-year forecast of income taxes under current or proposed law.
is a trademark of American Economics Group, Inc.