taxman.py

   1 #!/usr/bin/env python3
   2
   3 from typing import List, Optional, Tuple
   4
   5 from type.money import Money
   6 from type.rate import Rate
   7 import string_utils as su
   8
   9
  10 PESSIMISTIC_FEDERAL_INCOME_TAX_BRACKETS = [
  11     (Money(612351), Rate(0.70)),
  12     (Money(408201), Rate(0.55)),
  13     (Money(321451), Rate(0.45)),
  14     (Money(168401), Rate(0.35)),
  15     (Money( 78951), Rate(0.26)),
  16     (Money( 19401), Rate(0.18)),
  17     (Money(     1), Rate(0.13)),
  18 ]
  19
  20 CURRENT_FEDERAL_INCOME_TAX_BRACKETS = [
  21     (Money(612351), Rate(0.37)),
  22     (Money(408201), Rate(0.35)),
  23     (Money(321451), Rate(0.32)),
  24     (Money(168401), Rate(0.24)),
  25     (Money( 78951), Rate(0.22)),
  26     (Money( 19401), Rate(0.12)),
  27     (Money(     1), Rate(0.10)),
  28 ]
  29
  30 CURRENT_LONG_TERM_GAIN_FEDERAL_TAX_BRACKETS = [
  31     (Money(488851), Rate(0.20)),
  32     (Money( 78751), Rate(0.15)),
  33     (Money(     1), Rate(0.00)),
  34 ]
  35
  36 PESSIMISTIC_LONG_TERM_GAIN_FEDERAL_TAX_BRACKETS = (
  37     PESSIMISTIC_FEDERAL_INCOME_TAX_BRACKETS)
  38
  39
  40 federal_standard_deduction_dollars = Money(24800)   # Federal tax standard deduction
  41 federal_ordinary_income_tax_brackets = PESSIMISTIC_FEDERAL_INCOME_TAX_BRACKETS
  42 federal_dividends_and_long_term_gains_brackets = CURRENT_LONG_TERM_GAIN_FEDERAL_TAX_BRACKETS
  43
  44
  45 class TaxCollector(object):
  46     def __init__(
  47             self,
  48             ordinary_income_brackets,
  49             dividends_and_long_term_gains_brackets,
  50     ):
  51         self.ordinary_income_brackets = ordinary_income_brackets
  52         self.dividends_and_long_term_gains_brackets = dividends_and_long_term_gains_brackets
  53
  54         # These four accumulate and then clear every year (i.e. every call
  55         # to record_taxes_paid_and_reset_for_next_year)
  56         self.ordinary_income = Money(0)
  57         self.short_term_gains = Money(0)
  58         self.dividends_and_long_term_gains = Money(0)
  59         self.roth_income = Money(0)
  60
  61         # The rest of these aggregate and are used as part of the final stats.
  62         self.total_tax_bill = Money(0)
  63         self.total_ordinary_income = Money(0)
  64         self.total_short_term_gains = Money(0)
  65         self.total_dividends_and_long_term_gains = Money(0)
  66         self.total_roth_income = Money(0)
  67         self.total_aggregate_income = Money(0)
  68         self.max_annual_income = None
  69         self.max_annual_income_year = None
  70
  71     def record_taxes_paid_and_reset_for_next_year(self, current_year: int):
  72         self.total_tax_bill += self.approximate_annual_taxes()
  73         income = self.get_total_annual_income()
  74         if self.max_annual_income is None or income > self.max_annual_income:
  75             self.max_annual_income = income
  76             self.max_annual_income_year = current_year
  77         self.total_aggregate_income += income
  78         self.ordinary_income = Money(0)
  79         self.short_term_gains = Money(0)
  80         self.dividends_and_long_term_gains = Money(0)
  81         self.roth_income = Money(0)
  82
  83     def record_ordinary_income(self, amount: Money):
  84         self.ordinary_income += amount
  85         self.total_ordinary_income += amount
  86
  87     def record_short_term_gain(self, amount: Money):
  88         self.short_term_gains += amount
  89         self.total_short_term_gains += amount
  90
  91     def record_dividend_or_long_term_gain(self, amount: Money):
  92         self.dividends_and_long_term_gains += amount
  93         self.total_dividends_and_long_term_gains += amount
  94
  95     def record_roth_income(self, amount: Money):
  96         self.roth_income += amount
  97         self.total_roth_income += amount
  98
  99     def approximate_annual_taxes(self):
 100         taxes_due = Money(0)
 101
 102         # Handle ordinary income:
 103         ordinary_income = (self.ordinary_income +
 104                            self.short_term_gains -
 105                            federal_standard_deduction_dollars)
 106         if ordinary_income < 0:
 107             ordinary_income = 0
 108         taxes_due += self.compute_taxes_on_income_using_brackets(
 109             ordinary_income,
 110             self.ordinary_income_brackets
 111         )
 112
 113         # Handle dividends and long term gains:
 114         taxes_due += self.compute_taxes_on_income_using_brackets(
 115             self.dividends_and_long_term_gains,
 116             self.dividends_and_long_term_gains_brackets
 117         )
 118
 119         # Assume Roth money is still available tax free in the future.
 120         return taxes_due
 121
 122     def compute_taxes_on_income_using_brackets(
 123             self,
 124             income: Money,
 125             brackets: List[Tuple[Money, Rate]]
 126     ) -> Money:
 127         taxes_due = Money(0)
 128         while income > Money(1.0):
 129             rate = Rate(0.0)
 130             threshold = 0
 131             for bracket in brackets:
 132                 # Bracket is a tuple of (monetary_threshold,
 133                 # tax_rate).  So bracket[0] is a dollar amount and
 134                 # bracket[1] is a tax rate.  e.g. ( 250000, 0.20 )
 135                 # indicates that every dollar you earn over 250K is
 136                 # taxed at 20%.
 137                 if (income > bracket[0] and rate < bracket[1]):
 138                     threshold = bracket[0]
 139                     rate = bracket[1]
 140             taxed_amount = income - threshold
 141             taxes_due += taxed_amount * rate
 142             income = threshold
 143         return taxes_due
 144
 145     def how_many_more_dollars_can_we_earn_without_changing_tax_rate(
 146             self
 147     ) -> Optional[Money]:
 148         """Return number of ordinary income dollars we can make without
 149            changing this year's tax rate.  Note: this may return None
 150            which actually indicates something more like 'infinite since
 151            you're already at the top tax bracket.'"""
 152         threshold = None
 153         rate = Rate(999.0)
 154         income = self.ordinary_income
 155
 156         # Kinda hacky but if there's been no ordinary income this year
 157         # this method was saying "oh, well, you can earn one dollar
 158         # before your tax rate goes from zero to something non-zero."
 159         # This is correct but not useful -- this method is used to
 160         # opportunistically shuffle pretax money into Roth.  So let's
 161         # assume we've earned at least one dollar of ordinary income
 162         # this year and work from there.
 163         if income <= Money(0):
 164             income = Money(1.0)
 165
 166         # Walk the income tax brackets and look for the one just above
 167         # the one this year's income is activating.
 168         for bracket in self.ordinary_income_brackets:
 169             if (bracket[0] > income and bracket[1] < rate):
 170                 threshold = bracket[0]
 171                 rate = bracket[1]
 172
 173         # If we found the bracket just above here, use it to compute a
 174         # delta.
 175         if threshold is not None:
 176             assert threshold > income
 177             delta = threshold - income
 178             return delta
 179         return None
 180
 181     def get_total_annual_income(self) -> Money:
 182         return (
 183             self.ordinary_income +
 184             self.short_term_gains +
 185             self.dividends_and_long_term_gains +
 186             self.roth_income
 187         )
 188
 189     def approximate_annual_tax_rate(self) -> Rate:
 190         total_income = self.get_total_annual_income()
 191         total_taxes = self.approximate_annual_taxes()
 192         return Rate(
 193             multiplier=float(total_taxes) / float(total_income)
 194         )
 195
 196     def __repr__(self):
 197         with su.SprintfStdout() as ret:
 198             print("Taxes and Income:")
 199             print("    %-50s: %18s" % ("Total aggregate income",
 200                                        self.total_aggregate_income))
 201             print("    ...%-47s: %18s" % ("Ordinary income",
 202                                           self.total_ordinary_income))
 203             print("    ...%-47s: %18s" % ("Income from short term gains",
 204                                           self.total_short_term_gains))
 205             print("    ...%-47s: %18s" % ("Income from dividends and long term gains",
 206                                           self.total_dividends_and_long_term_gains))
 207             print("    ...%-47s: %18s" % ("Roth income",
 208                                           self.total_roth_income))
 209             print("    %-50s: %18s (%s)" % ("Maximum annual income",
 210                                             self.max_annual_income,
 211                                             f'in {self.max_annual_income_year}'))
 212             print("    %-50s: %18s" % ("Total taxes paid",
 213                                        self.total_tax_bill))
 214             overall_tax_rate = Rate(
 215                 float(self.total_tax_bill) / float(self.total_aggregate_income)
 216             )
 217             print("    %-50s: %18s" % ("Effective tax rate",
 218                                        overall_tax_rate), end='')
 219         return ret()