OpenFisca can be used to evaluate the quantitative impact of legislation changes.

Such as determining who would win or lose from an income tax reform, what the impact would be of a social welfare redesign, or how to finance a universal basic income.

Within OpenFisca these are known as 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 differs from the original one. Calculations can be run on both of them and the results compared.

To use reforms or code new ones, check the reform documentation.

Note that OpenFisca simulates only the mechanics of taxes and benefits, it doesn’t take into account the retro-action of economic agents. For instance, it can estimate the increase of the households disposable income if a universal basic income is introduced, but a simulation won’t address the consumption increase this policy may generate. OpenFisca is a static microsimulation engine.

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 to modify a tax and benefit system in order to study the impact of a legislation change.

  • Use an extension to write formulas that are based on a main tax and benefit system, while keeping the code separated from the main country package (e.g. for local benefits).