OpenFisca can be used to evaluate the quantitative impact of legislation changes.
You may for instance use it to determine who would win or lose from an income tax reform, what would be the impact of a social welfare redesign, or how to finance a universal basic income.
To do so, we use OpenFisca reforms. A reform is a set of modifications to be applied to a reference tax and benefit system. It generates a reformed tax and benefit system that slightly differs from the original one. We can then run calculations on both of them, and compare results.
To use reforms or code your own ones, check the reform documentation.
Note that OpenFisca simulates only the mechanics of taxes and benefits, but doesn't take into account the retro-action of economic agents. For instance, you can estimate the increase of the households disposable income in case a universal basic income is introduced, but OpenFisca won't tell you anything about the consumption increase this policy may generate.
Differences between reforms and extensions
Reforms are sometimes confused with another mechanism: extensions. These two mechanisms do not have the same purpose:
- Use a reform if you want to modify a tax and benefit system in order to study the impact of a legislation change.
- Use an extension if you want to write formulas that are based on a main tax and benefit system, while keeping their code separated from the main country package (e.g. for local prestations).