Statistical Match Procedure used for TRIM3 Baselines Prior to 2003

Prior to the 2003 FederalTax baseline, the statistical match procedure uses a modified approach to an expanding-cell match. The match finds "donor" records from the PUF that control for demographic characteristics including age, marital status, family size, and region variables, as well as income within a specified tolerance. After an acceptable number of donor records are found for each CPS record, the CPS record is assigned a given income or expense if the percent of matched donor records with that income or expense exceeds a certain threshold. If so, then the CPS record is assigned the average income or expense calculated from the matched set of donor records that have the relevant income or expense. Adjustment factors are applied to the statistical match in such a way that the resulting tax baseline comes reasonably close to real-world targets.

Checks are made to ensure that inconsistencies with other transfer programs are not created. For example, a person who has been assigned to participate in the SSI, TANF, or Food Stamp Program is prevented from being assigned capital gains.