Fix MO refundable EITC reform crash and zero-refund bug

changelog.d/fix-mo-refundable-eitc-reform-crash.fixed.md

@@ -0,0 +1 @@
+Fixed the Missouri refundable EITC contrib reform, which crashed at calculation time and paid no refundable credit to filers with no Missouri tax liability.

policyengine_us/reforms/states/mo/eitc/mo_refundable_eitc_reform.py

@@ -20,7 +20,11 @@ class mo_refundable_wftc(Variable):
         defined_for = StateCode.MO
 
         def formula(tax_unit, period, parameters):
-            return tax_unit("mo_wftc", period)
+            # Use the potential (uncapped) WFTC so the full credit is paid as
+            # a refund; `mo_wftc` is capped at tax liability and would zero out
+            # the credit for the low-liability filers refundability is meant
+            # to help.
+            return tax_unit("mo_wftc_potential", period)
 
     class mo_non_refundable_wftc(Variable):
         value_type = float
@@ -43,7 +47,12 @@ class mo_non_refundable_credits(Variable):
         defined_for = StateCode.MO
 
         def formula(tax_unit, period, parameters):
-            # Include the nonrefundable WFTC (0 when reform is in effect)
+            # Today `gov.states.mo.tax.income.credits.non_refundable` is
+            # just `[mo_wftc]`, so returning the (zeroed) reform replacement
+            # is equivalent to the baseline. If Missouri later adds a second
+            # nonrefundable credit, this formula would silently drop it —
+            # at that point switch to summing the full nonrefundable list
+            # with `mo_wftc` filtered out, mirroring the UT/OH fix pattern.
             return tax_unit("mo_non_refundable_wftc", period)
 
     class mo_refundable_credits(Variable):
@@ -53,14 +62,19 @@ class mo_refundable_credits(Variable):
         unit = USD
         definition_period = YEAR
         defined_for = StateCode.MO
+        # The baseline variable computes via `adds`. We replace it with a
+        # formula, so clear the inherited computation modes to avoid mixing
+        # `formula` with `adds`/`subtracts` (rejected by the core engine).
+        adds = None
+        subtracts = None
 
         def formula(tax_unit, period, parameters):
-            # Standard refundable credits
-            other_refundable = add(
-                tax_unit,
-                period,
-                "gov.states.mo.tax.income.credits.refundable",
-            )
+            # Standard refundable credits, resolved to the list of variable
+            # names before passing to `add` (which iterates variable names).
+            refundable_credits = parameters(
+                period
+            ).gov.states.mo.tax.income.credits.refundable
+            other_refundable = add(tax_unit, period, refundable_credits)
             # Add refundable WFTC (positive when reform is in effect)
             refundable_wftc = tax_unit("mo_refundable_wftc", period)
             return other_refundable + refundable_wftc

policyengine_us/tests/code_health/test_non_refundable_credit_downstream_consumers.py

@@ -21,9 +21,6 @@
     "md_non_refundable_eitc": {
         "variables/gov/states/md/tax/income/credits/eitc/md_eitc.py",
     },
-    "mo_wftc": {
-        "reforms/states/mo/eitc/mo_refundable_eitc_reform.py",
-    },
     "ny_household_credit": {
         "reforms/states/ny/wftc/ny_working_families_tax_credit.py",
         "variables/gov/states/ny/tax/income/credits/ny_eitc.py",

policyengine_us/tests/policy/contrib/states/mo/child_poverty_impact_dashboard/eitc/mo_refundable_eitc.yaml

@@ -1,19 +1,26 @@
-- name: Case 1 - MO WFTC is refundable when reform active
+# The reform makes the Missouri WFTC fully refundable. It pays the uncapped
+# potential credit (mo_wftc_potential), so these tests drive the credit from
+# the federal EITC rather than injecting the capped mo_wftc. The 2024 WFTC
+# match is 20% of the federal EITC.
+
+- name: Case 1 - MO WFTC is fully refundable (uncapped) when reform active
   period: 2024
   reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc
   input:
     state_code: MO
-    mo_wftc: 500
+    eitc: 2_500
   output:
-    mo_refundable_wftc: 500
+    mo_wftc_potential: 500  # 2,500 * 0.2
+    mo_wftc: 0  # capped at zero tax liability
+    mo_refundable_wftc: 500  # full potential paid as a refund
     mo_non_refundable_wftc: 0
 
-- name: Case 2 - MO WFTC is 0 when WFTC is 0
+- name: Case 2 - MO refundable WFTC is 0 when the federal EITC is 0
   period: 2024
   reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc
   input:
     state_code: MO
-    mo_wftc: 0
+    eitc: 0
   output:
     mo_refundable_wftc: 0
     mo_non_refundable_wftc: 0
@@ -23,7 +30,7 @@
   reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc
   input:
     state_code: CA
-    mo_wftc: 500
+    eitc: 2_500
   output:
     mo_refundable_wftc: 0
     mo_non_refundable_wftc: 0
@@ -33,6 +40,6 @@
   reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc
   input:
     state_code: MO
-    mo_wftc: 500
+    eitc: 2_500
   output:
     mo_non_refundable_credits: 0

policyengine_us/tests/policy/reform/mo_refundable_eitc.yaml

@@ -0,0 +1,93 @@
+# Tests for the Missouri refundable EITC (WFTC) contrib reform.
+# Regression coverage for https://github.com/PolicyEngine/policyengine-us/issues/8640
+# (the reform previously crashed at calculation time and, once running, paid no
+# refundable credit to zero-liability filers).
+
+- name: Reform pays the full potential WFTC as a refundable credit at zero liability
+  absolute_error_margin: 0.01
+  period: 2026
+  reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc_reform.mo_refundable_eitc
+  input:
+    state_code: MO
+    eitc: 5_000
+  output:
+    # 2026 WFTC match is 20% of the federal EITC: 5,000 * 0.2 = 1,000.
+    mo_wftc_potential: 1_000
+    # The capped credit is 0 at zero liability; the fix pays the uncapped
+    # potential instead, so this contrast is the whole point of the reform.
+    mo_wftc: 0
+    # WFTC is moved out of the nonrefundable bucket...
+    mo_non_refundable_wftc: 0
+    mo_non_refundable_credits: 0
+    # ...and paid in full as refundable, even with no Missouri tax liability.
+    mo_refundable_wftc: 1_000
+    mo_refundable_credits: 1_000
+
+- name: Reform does not double count when liability already absorbs the WFTC
+  absolute_error_margin: 0.01
+  period: 2026
+  reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc_reform.mo_refundable_eitc
+  input:
+    state_code: MO
+    eitc: 5_000
+    mo_income_tax_before_credits: 1_000
+  output:
+    # Full potential paid as refundable; nonrefundable portion stays zero.
+    mo_refundable_wftc: 1_000
+    mo_non_refundable_wftc: 0
+    mo_refundable_credits: 1_000
+    # The $1,000 liability is offset exactly once by the refundable credit:
+    # 1,000 before refundable credits - 1,000 refundable = 0. If the credit
+    # were double counted this would go negative.
+    mo_income_tax_before_refundable_credits: 1_000
+    mo_income_tax: 0
+
+- name: Reform preserves other Missouri refundable credits (does not drop them)
+  absolute_error_margin: 0.01
+  period: 2026
+  reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc_reform.mo_refundable_eitc
+  input:
+    state_code: MO
+    eitc: 5_000
+    # The other Missouri refundable credit in
+    # `gov.states.mo.tax.income.credits.refundable` is mo_property_tax_credit.
+    # Pin it to a positive value: the reform's mo_refundable_credits formula
+    # must sum it alongside mo_refundable_wftc, not replace it.
+    mo_property_tax_credit: 300
+  output:
+    mo_refundable_wftc: 1_000
+    # 1,000 (refundable WFTC) + 300 (property tax credit) = 1,300.
+    mo_refundable_credits: 1_300
+
+- name: Reform pays zero when the federal EITC is zero (zero-EITC boundary)
+  absolute_error_margin: 0.01
+  period: 2026
+  reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc_reform.mo_refundable_eitc
+  input:
+    state_code: MO
+    eitc: 0
+  output:
+    mo_wftc_potential: 0
+    mo_refundable_wftc: 0
+    mo_refundable_credits: 0
+
+- name: Reform pays in full when liability only partially absorbs the WFTC
+  absolute_error_margin: 0.01
+  period: 2026
+  reforms: policyengine_us.reforms.states.mo.eitc.mo_refundable_eitc_reform.mo_refundable_eitc
+  input:
+    state_code: MO
+    eitc: 5_000
+    # Potential WFTC = 1,000. Liability of 400 would absorb only part of the
+    # baseline (nonrefundable-capped) WFTC; the reform should still pay the
+    # full uncapped potential as refundable.
+    mo_income_tax_before_credits: 400
+  output:
+    mo_wftc_potential: 1_000
+    mo_refundable_wftc: 1_000
+    mo_refundable_credits: 1_000
+    # The full $1,000 refundable credit flows through against $400 of
+    # liability, producing a $600 refund. mo_income_tax goes negative
+    # (refund) by exactly the surplus — proves no double-counting (would
+    # be -$1,000 if the credit were applied twice).
+    mo_income_tax: -600