#!/usr/bin/env python3 """Post-transfer spendable-income comparison for a MA child support order. THE QUESTION THIS ANSWERS ------------------------- Whether, after a guidelines order, the recipient household holds more spendable income than the payor. This tests it. The guidelines compute support on GROSS (available income, which is gross less a few support/insurance deductions and NO tax adjustment -- verified from Section I of the 2025 Guidelines). The obligation is paid from NET. Child support is not deductible to the payor and not taxable to the recipient. So the transfer is: measured in pre-tax dollars, paid out of post-tax dollars, received tax-free. That is a units mismatch, and it compounds with the marginal rate. This script quantifies where the two households actually land. VERIFICATION STATUS (2026-09-02) FEDERAL constants VERIFIED for TY2026 -- brackets, standard deduction, SS wage base, EITC maxima and phaseouts, CTC. Source: Tax Foundation TY2026 tables. MASSACHUSETTS constants STILL APPROXIMATE -- ma_rate and ma_personal_exemption have NOT been checked against MA DOR. The runtime banner says so on every run. Every constant lives in TAX_PARAMS so it can be corrected in one place. Usage: python3 model/net_position.py python3 model/net_position.py --payor-gross 220000 --recipient-gross 31200 --kids 2 """ import argparse # --------------------------------------------------------------------------- # PARAMETERS -- federal verified TY2026; MA approximate (see module docstring) # --------------------------------------------------------------------------- TAX_PARAMS = { "federal_verified": True, # TY2026, checked 2026-09-02 # MA verified 2026-09-02. Rate 5%; exemptions single $4,400 / HoH $6,800 (HoH was # previously ASSUMED, now confirmed) / $1,000 per dependent. # Two REFUNDABLE MA credits were missing entirely until 2026-09-02 and both flow to # the lower-income parent claiming the children: # MA EITC = 40% of the federal EITC (raised from 30% by the 2023 tax act). # Child and Family Tax Credit = $440 per qualifying dependent, TY2024 and after, # M.G.L. c. 62 s. 6(x), no cap on the number of dependents, but limited to # dependents UNDER AGE 13 (or disabled, or 65+). # mass.gov 403s automated fetch; confirmed via malegislature.gov and the Commonwealth's # FY26 tax expenditure budget (budget.digital.mass.gov, item 1.628), which quotes the # statute. See docs/2026-09-02-ma-tax-constants-verified.md. "ma_verified": True, "tax_year": 2026, "std_deduction": {"single": 16_100, "hoh": 24_150}, "brackets": { # (rate, upper bound of taxable income). TY2026, verified 2026-09-02. "single": [ (0.10, 12_400), (0.12, 50_400), (0.22, 105_700), (0.24, 201_775), (0.32, 256_225), (0.35, 640_600), (0.37, float("inf")), ], "hoh": [ (0.10, 17_700), (0.12, 67_450), (0.22, 105_700), (0.24, 201_775), (0.32, 256_200), (0.35, 640_600), (0.37, float("inf")), ], }, "ss_rate": 0.062, "ss_wage_base": 184_500, "medicare_rate": 0.0145, "addl_medicare_rate": 0.009, "addl_medicare_threshold": 200_000, "ma_rate": 0.05, "ma_personal_exemption": {"single": 4_400, "hoh": 6_800}, "ma_dependent_exemption": 1_000, "ma_eitc_pct": 0.40, "ma_cftc_per_dependent": 440, # Refundable credits that flow to the lower-income parent claiming the children. "ctc_per_child": 2_200, "ctc_refundable_cap": 1_700, # EITC by number of qualifying children -- TY2026 verified 2026-09-02. # (max credit, phaseout start HoH/single, phaseout end) "eitc": { 0: (664, 10_860, 19_540), 1: (4_427, 23_890, 51_593), 2: (7_316, 23_890, 58_629), 3: (8_231, 23_890, 62_974), }, } def federal_tax(gross, status, params): """Ordinary federal income tax before credits.""" taxable = max(0.0, gross - params["std_deduction"][status]) tax, last = 0.0, 0.0 for rate, upper in params["brackets"][status]: if taxable <= last: break tax += rate * (min(taxable, upper) - last) last = upper return tax def fica(gross, params): ss = params["ss_rate"] * min(gross, params["ss_wage_base"]) med = params["medicare_rate"] * gross addl = params["addl_medicare_rate"] * max(0.0, gross - params["addl_medicare_threshold"]) return ss + med + addl def ma_tax(gross, status, params, kids=0): """Massachusetts income tax before the refundable state credits. Dependents reduce taxable income by $1,000 each on top of the filing-status exemption. The 4% surtax on income over $1,000,000 is not modelled -- no scenario in this project approaches it.""" exempt = params["ma_personal_exemption"][status] + params["ma_dependent_exemption"] * kids return params["ma_rate"] * max(0.0, gross - exempt) def ma_refundable_credits(gross, kids, status, params, kids_under_13=None): """MA EITC (40% of the federal credit) plus the Child and Family Tax Credit. Both are refundable, so for a low-income recipient they are cash, not just tax forgiveness -- which is precisely the mechanism the Task Force said "can materially affect a household's available income" and then deferred. kids_under_13 defaults to all children. The CFTC is limited to dependents under 13 (or disabled, or 65+), so a household of teenagers gets the EITC portion only.""" if status != "hoh" or kids == 0: return 0.0 if kids_under_13 is None: kids_under_13 = kids fed_eitc = _federal_eitc(gross, kids, params) return params["ma_eitc_pct"] * fed_eitc + params["ma_cftc_per_dependent"] * kids_under_13 def _federal_eitc(gross, kids, params): mx, start, end = params["eitc"][min(kids, 3)] if gross <= start: return float(mx) if gross >= end: return 0.0 return mx * (end - gross) / (end - start) def refundable_credits(gross, kids, status, params): """Federal CTC + EITC for the parent claiming the children. IRC s. 24(d): the refundable Additional Child Tax Credit is the LEAST of the entitlement remaining after it offsets tax liability, $1,700 per child, and 15% of earned income above $2,500. An earlier version omitted the earned-income phase-in and added a flat credit on top of a fully-subtracted liability, which OVERSTATED the recipient by about $480/yr on the worked example. The docstring then called that "deliberately conservative" -- it was conservative in the wrong direction, i.e. it flattered this project's own argument. Caught in QA 2026-09-02.""" if status != "hoh" or kids == 0: return 0.0 entitlement = params["ctc_per_child"] * kids tax_owed = federal_tax(gross, status, params) nonrefundable = min(entitlement, tax_owed) refundable = min(entitlement - nonrefundable, params["ctc_refundable_cap"] * kids, 0.15 * max(0.0, gross - 2_500)) return nonrefundable + refundable + _federal_eitc(gross, kids, params) def net_income(gross, status, kids, params, kids_under_13=None): """After-tax income including federal AND Massachusetts refundable credits.""" tax = (federal_tax(gross, status, params) + fica(gross, params) + ma_tax(gross, status, params, kids)) return (gross - tax + refundable_credits(gross, kids, status, params) + ma_refundable_credits(gross, kids, status, params, kids_under_13)) def analyze(payor_gross, recipient_gross, kids, weekly_support, weekly_childcare, payor_childcare_share, params=TAX_PARAMS, kids_under_13=None): annual_support = weekly_support * 52.0 annual_childcare = weekly_childcare * 52.0 payor_cc = annual_childcare * payor_childcare_share payor_net = net_income(payor_gross, "single", 0, params) recip_net = net_income(recipient_gross, "hoh", kids, params, kids_under_13) payor_after = payor_net - annual_support - payor_cc # Support is received tax-free; recipient bears the remaining childcare cost. recip_after = recip_net + annual_support - (annual_childcare - payor_cc) combined_gross = payor_gross + recipient_gross return { "payor_gross": payor_gross, "recipient_gross": recipient_gross, "payor_gross_share": payor_gross / combined_gross, "payor_net": payor_net, "recip_net": recip_net, "payor_eff_rate": 1 - payor_net / payor_gross, "recip_eff_rate": 1 - recip_net / recipient_gross if recipient_gross else 0.0, "annual_support": annual_support, "payor_childcare": payor_cc, "support_pct_of_payor_gross": annual_support / payor_gross, "support_pct_of_payor_net": annual_support / payor_net, "burden_pct_of_payor_net": (annual_support + payor_cc) / payor_net, "payor_after": payor_after, "recip_after": recip_after, "payor_after_share": payor_after / (payor_after + recip_after), "recip_per_person": recip_after / (1 + kids), "payor_per_person": payor_after, "gap": payor_after - recip_after, } def crossover(payor_gross, recipient_gross, kids, weekly_childcare, payor_childcare_share, params=TAX_PARAMS, kids_under_13=None): """Weekly support at which the recipient household passes the payor in spendable income.""" lo, hi = 0.0, 5_000.0 for _ in range(200): mid = (lo + hi) / 2 r = analyze(payor_gross, recipient_gross, kids, mid, weekly_childcare, payor_childcare_share, params, kids_under_13) if r["gap"] > 0: lo = mid else: hi = mid return (lo + hi) / 2 def main(): p = argparse.ArgumentParser() p.add_argument("--payor-gross", type=float, default=220_000) p.add_argument("--recipient-gross", type=float, default=31_200) # ~MA minimum wage FT p.add_argument("--kids", type=int, default=2) p.add_argument("--weekly-support", type=float, default=None) p.add_argument("--weekly-childcare", type=float, default=0.0) a = p.parse_args() if not TAX_PARAMS["federal_verified"]: print("!" * 78) print("! FEDERAL TAX CONSTANTS UNVERIFIED -- DO NOT QUOTE ANY NUMBER BELOW. !") print("!" * 78) if not TAX_PARAMS["ma_verified"]: print("-" * 78) print("- NOTE: federal constants verified TY2026. MASSACHUSETTS rate and personal -") print("- exemption are still APPROXIMATE and unchecked against MA DOR publications. -") print("-" * 78) print() combined = a.payor_gross + a.recipient_gross cc_share = a.payor_gross / combined # proxy for Line 3c available-income share print(f"Payor gross ${a.payor_gross:>12,.0f}") print(f"Recipient gross ${a.recipient_gross:>12,.0f}") print(f"Payor gross share of combined: {cc_share:.1%} Children: {a.kids}\n") xo = crossover(a.payor_gross, a.recipient_gross, a.kids, a.weekly_childcare, cc_share) print(f"CROSSOVER: recipient household passes payor at ${xo:,.0f}/week " f"(${xo*52:,.0f}/yr) of support.\n") supports = [500, 750, 1000, 1250, 1500] if a.weekly_support is None else [a.weekly_support] hdr = (f"{'wk supp':>8} {'%gross':>7} {'%NET':>7} {'payor after':>13} " f"{'recip after':>13} {'payor shr':>10} {'recip/person':>13}") print(hdr) print("-" * len(hdr)) for s in supports: r = analyze(a.payor_gross, a.recipient_gross, a.kids, s, a.weekly_childcare, cc_share) flag = " <-- SHE IS AHEAD" if r["gap"] < 0 else "" print(f"{s:>8,.0f} {r['support_pct_of_payor_gross']:>6.1%} " f"{r['support_pct_of_payor_net']:>6.1%} {r['payor_after']:>13,.0f} " f"{r['recip_after']:>13,.0f} {r['payor_after_share']:>9.1%} " f"{r['recip_per_person']:>13,.0f}{flag}") r = analyze(a.payor_gross, a.recipient_gross, a.kids, 1000, a.weekly_childcare, cc_share) print(f"\nPayor effective tax rate: {r['payor_eff_rate']:.1%}") print(f"Recipient effective tax rate: {r['recip_eff_rate']:.1%} (negative = net credits)") print("\nThe 40%-of-gross valve at Line 3a fires at " f"${0.40*a.payor_gross/52:,.0f}/week of support.") print("Expressed against NET, that same order is " f"{0.40*a.payor_gross/r['payor_net']:.1%} of take-home.") if __name__ == "__main__": main()