Direct Tax Effects for Employee Compensation Event

Hello Luke,

What Event Type are you using in the Event? Industry Employee Compensation (EC), or Labor Income with EC as the Specification? 

Industry EC Events should include Direct results, including Direct tax impacts, while Labor Income > EC events will only generate Induced Effects. In a Labor Income Event, a Direct Industry is not specified, therefore only the effects of the Labor Income being spent is captured in the analysis, which is categorized as an Induced Effect.

https://implanhelp.zendesk.com/hc/en-us/articles/360019638713-Explaining-Event-Types

Thank you,
Maria 

Maria,

We are running a Labor Income with EC.  Do the tax results in this case include payroll/income tax?

Thanks,

Luke

Hi Luke,

Unfortunately, a limitation of Labor Income Events is there is no Direct Effect captured at all. Therefore, the Direct Taxes paid on the EC you've analyzed is not captured in the results.

I can offer a workaround that may seem counterintuitive. The employment and payroll of govt. Industries (539-546) do not make any intermediate input purchases. Output in these industries are made up entirely of EC and Other Property Income. So, instead of using a Labor Income Event, you could use an Industry Employee Compensation Event and specify one of these Industries (539-546, still with $1M as the Event Value), so that Direct Taxes are captured. Just be sure to use one of these industries that is present in the Region. 

In this Industry EC event you will be largely analyzing just the EC you've entered. IMPLAN will estimate some Other Property Income (OPI) which will be captured in the Direct Output results and in the Corporate Enterprise column of the Taxes results. Disregarding these two spots, all else will reflect the Direct and Induced effect of the Labor Income analyzed. There will be no Indirect Effects.

The OPI is an estimation of the depreciation of the capital these government workers would need to use as a part of their job. This OPI is captured just at the Direct level, and is otherwise a leakage (does not generate additional rounds of effects). Aside from this and ratio of Employment to payroll, there is nothing that makes the Labor Income in government employment and payroll Industries unique, therefore using one of these industries as a workaround is OK even when the income is not earned by government workers.

Thank you,
Maria