R/taxCFwork.R

In sstoeckl/pensionfinanceLi: Optimal Pension Decisions in Liechtenstein

#' Calculate Income after taxes during savings phase
#'
#' This function calculates income after deduction taxes during the cash-flow phase and is an important input parameter
#' for the third pillar function `tpCFwork()`, where CF after tax is needed to determine consumption/saving. It further
#' specifies which part of taxes should be paid from income and which part from liquid wealth
#'
#' @param income income before tax (vector or scalar)
#' @param liquid_wealth liquid wealth at 1.1. of tax year (S3)
#' @param illiquid_wealth illiquid wealth at 1.1. of tax year (w0)
#'
#' @return net (after tax) income payments, specifying which part should be paid from cash-flows (income) and from liquid wealth
#'
#' @examples
#' taxCFwork(income=c(100000,100000,100000),liquid_wealth=c(100000,50000,-100000),
#' illiquid_wealth=c(100000,150000,100000))
#'
#' @export
taxCFwork <- function(income,liquid_wealth,illiquid_wealth){
  #########################################
  ## 0. checks
  # ret_age and c_age checked before
  #########################################
  ## 1. Calculations
  #########################################
  ## 2. Tax Settings
  deduct <- 5300 # sum of deductibles is 5300 CHF/year (excl. second pillar/already exhausted)
  # taxbrackets
  tbr <- c(15000,0.01,150,
           20000,0.02,400,
           40000,0.01,400,
           70000,0.01,700,
           100000,0.01,1000,
           130000,0.005,650,
           160000,0.005,800,
           200000,0.01,2000)
  dim(tbr) <- c(3,8); tbr <- t(tbr)
  #########################################
  ## 3.
  taxbase <- income + (liquid_wealth + illiquid_wealth)*0.04 - deduct
  taxbase_no_wealth <- income - deduct
  taxamount <- (( (taxbase>tbr[1,1])*(taxbase*tbr[1,2]-tbr[1,3]) )+
    ( (taxbase>tbr[2,1])*(taxbase*tbr[2,2]-tbr[2,3]) )+
    ( (taxbase>tbr[3,1])*(taxbase*tbr[3,2]-tbr[3,3]) )+
    ( (taxbase>tbr[4,1])*(taxbase*tbr[4,2]-tbr[4,3]) )+
    ( (taxbase>tbr[5,1])*(taxbase*tbr[5,2]-tbr[5,3]) )+
    ( (taxbase>tbr[6,1])*(taxbase*tbr[6,2]-tbr[6,3]) )+
    ( (taxbase>tbr[7,1])*(taxbase*tbr[7,2]-tbr[7,3]) )+
    ( (taxbase>tbr[8,1])*(taxbase*tbr[8,2]-tbr[8,3]) )) * 2.5 # assumption: 150% municipality tax
  taxamount_no_wealth <- (( (taxbase_no_wealth>tbr[1,1])*(taxbase_no_wealth*tbr[1,2]-tbr[1,3]) )+
                  ( (taxbase_no_wealth>tbr[2,1])*(taxbase_no_wealth*tbr[2,2]-tbr[2,3]) )+
                  ( (taxbase_no_wealth>tbr[3,1])*(taxbase_no_wealth*tbr[3,2]-tbr[3,3]) )+
                  ( (taxbase_no_wealth>tbr[4,1])*(taxbase_no_wealth*tbr[4,2]-tbr[4,3]) )+
                  ( (taxbase_no_wealth>tbr[5,1])*(taxbase_no_wealth*tbr[5,2]-tbr[5,3]) )+
                  ( (taxbase_no_wealth>tbr[6,1])*(taxbase_no_wealth*tbr[6,2]-tbr[6,3]) )+
                  ( (taxbase_no_wealth>tbr[7,1])*(taxbase_no_wealth*tbr[7,2]-tbr[7,3]) )+
                  ( (taxbase_no_wealth>tbr[8,1])*(taxbase_no_wealth*tbr[8,2]-tbr[8,3]) )) * 2.5 # assumption: 150% municipality tax
  taxcf <-list()
  taxcf$from_cf <- taxamount_no_wealth + (taxamount - taxamount_no_wealth)*as.numeric(liquid_wealth<(taxamount - taxamount_no_wealth))
  taxcf$from_liquid_wealth <- (taxamount - taxamount_no_wealth)*as.numeric(liquid_wealth>=(taxamount - taxamount_no_wealth))
  return(taxcf)
}