Use mortgage-specific JCT MID target

Author: MaxGhenis

changelog.d/mid-jct-mortgage-tax-expenditure.fixed.md

@@ -0,0 +1 @@
+Use a mortgage-specific deduction variable for the JCT mortgage tax expenditure target instead of broad interest deductions.

policyengine_us_data/db/etl_national_targets.py

@@ -87,7 +87,7 @@ def extract_national_targets(dataset: str = DEFAULT_DATASET):
             "year": HARDCODED_YEAR,
         },
         {
-            "variable": "interest_deduction",
+            "variable": "deductible_mortgage_interest",
             "value": 24.8e9,
             "source": "Joint Committee on Taxation",
             "notes": "Mortgage interest deduction tax expenditure",

policyengine_us_data/tests/test_database_build.py

@@ -125,6 +125,25 @@ def test_national_targets_loaded(built_db):
         )
 
 
+def test_jct_mortgage_tax_expenditure_uses_mortgage_specific_variable(built_db):
+    """The mortgage JCT target should point at a mortgage-specific variable."""
+    conn = sqlite3.connect(str(built_db))
+    rows = conn.execute("""
+        SELECT DISTINCT t.variable, t.source, t.notes
+        FROM targets t
+        WHERE t.variable = 'deductible_mortgage_interest'
+        """).fetchall()
+    conn.close()
+
+    assert rows == [
+        (
+            "deductible_mortgage_interest",
+            "PolicyEngine",
+            "Mortgage interest deduction tax expenditure | Modeled as repeal-based income tax expenditure target | Source: Joint Committee on Taxation",
+        )
+    ]
+
+
 def test_state_income_tax_targets(built_db):
     """State income tax targets should cover all income-tax states."""
     conn = sqlite3.connect(str(built_db))

policyengine_us_data/tests/test_datasets/test_enhanced_cps.py

@@ -64,7 +64,7 @@ def deprecated_test_ecps_replicates_jct_tax_expenditures_full():
         "salt_deduction": 21.247e9,
         "medical_expense_deduction": 11.4e9,
         "charitable_deduction": 65.301e9,
-        "interest_deduction": 24.8e9,
+        "deductible_mortgage_interest": 24.8e9,
     }
 
     baseline = Microsimulation(dataset=EnhancedCPS_2024)

policyengine_us_data/tests/test_datasets/test_sparse_enhanced_cps.py

@@ -129,7 +129,7 @@ def deprecated_test_sparse_ecps_replicates_jct_tax_expenditures_full(sim):
         "salt_deduction": 21.247e9,
         "medical_expense_deduction": 11.4e9,
         "charitable_deduction": 65.301e9,
-        "interest_deduction": 24.8e9,
+        "deductible_mortgage_interest": 24.8e9,
     }
 
     baseline = sim

policyengine_us_data/utils/loss.py

@@ -684,7 +684,7 @@ def _add_tax_expenditure_targets(
         "salt_deduction": 21.247e9,
         "medical_expense_deduction": 11.4e9,
         "charitable_deduction": 65.301e9,
-        "interest_deduction": 24.8e9,
+        "deductible_mortgage_interest": 24.8e9,
         "qualified_business_income_deduction": 63.1e9,
     }