# Personal Income Tax and Non-Tax Receipts

## Changes to the FRB/US model

- The federal and state and local (S&L) personal income tax and nontax receipts (TFPN and TSPN) were consolidated into personal income tax and nontax receipts (TPN).

Old model

    tfpn - tfpn_aerr = trfp*(ypn - gftn - gstn)

    tspn - tspn_aerr = trsp*(ypn - gftn - gstn)

New model

    tpn - tpn_aerr = trp*(ypn - gtn)

- The average federal and S&L Average federal tax rate for personal income tax and nontax receipts (TRFP and TRSP) were consolidated into personal income tax and nontax receipts (TRP).

Old model

    trfp - trfp_aerr =
    y_trfp(1)*trfpt
     + y_trfp(2)* (trfp(-1) - trfpt(-1))
     + y_trfp(3)* (trfp(-2) - trfpt(-2))
     + y_trfp(4)*xgap2(-1)

    trsp - trsp_aerr =
    y_trsp(1)*trsp(-1)
     + y_trsp(2)* trspt
     + y_trsp(3)* trspt(-1)
     + y_trsp(4)*xgap2(-1)
     + y_trsp(5)*d(trfp)

New model

    trp - trp_aerr =
    y_trp(1)*trpt
     + y_trp(2)* (trp(-1) - trpt(-1))
     + y_trp(3)* (trp(-2) - trpt(-2))
     + y_trp(4)*xgap2(-1)

- The average federal and S&L Average federal tax rate trend for personal income tax and nontax receipts (TRFPT and TRSPT) were consolidated into personal income tax and nontax receipts (TRPT).

Old model

    trfpt - trfpt_aerr = dfpex*trfptx
     + dfpdbt*(trfpt(-1)
     + y_trfpt(1)*(gfdbtn(-1)/xgdpn(-1) - gfdrt(-1))
     + y_trfpt(2)*d(gfdbtn(-1)/xgdpn(-1) - gfdrt(-1)))
     + dfpsrp*(trfpt(-1)
     + y_trfpt(3)*((gfsrpn(-1) - egfin(-1) + jygfgn(-1)
     + jygfen(-1))/xgdpn(-1) - gfsrt(-1)))

    trspt - trspt_aerr = dfpex*trsptx
     + dfpdbt*(trspt(-1)
     + y_trspt(1)*(gsdbtn(-1)/xgdpn(-1) - gsdrt(-1))
     + y_trspt(2)*d(gsdbtn(-1)/xgdpn(-1) - gsdrt(-1)))
     + dfpsrp*(trspt(-1)
     + y_trspt(3)*((gssrpn(-1) - egsin(-1) + jygsgn(-1)
     + jygsen(-1))/xgdpn(-1) - gssrt(-1)))

New model

    trpt - trpt_aerr = dfpex*trptx
     + dfpdbt*(trpt(-1)
     + y_trpt(1)*(gfdbtn(-1)/xgdpn(-1) - gfdrt(-1))
     + y_trpt(2)*d(gfdbtn(-1)/xgdpn(-1) - gfdrt(-1)))
     + dfpsrp*(trpt(-1)
     + y_trpt(3)*((gfsrpn(-1)/xgdpn(-1))
     - (gfsrt(-1) + 0.005*xgap2(-1))))

## Some details about the changes and simplifications

- We have consolidated the federal and S&L tax and non-tax receipts series into a single one for each pair of series.

- The exogenous variable TRFPTX has become TRPTX.

- Despite the consolidation, the long-run fiscal target (set by the usual switches) remains either the federal government debt or surplus ratio as these two variables have been preserved in the new version of the model.

- A small cyclical adjustment to the surplus-to-GDP target (GFSRT) ratio has been added to the equation of the trend of the average personal income tax rate (TRPT) in the new model.