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Wednesday, September 21, 2011

House Holds Hearing Today on Economic Models to Analyze Tax Reform

House Logo The House Ways & Means Committee holds a hearing today on Economic Models Available to the Joint Committee on Taxation for Analyzing Tax Reform Proposals:

[The hearing will] review and examine the variety of economic models used by the Joint Committee on Taxation (JCT) to analyze and score tax reform legislation. In particular, the Committee will review the tools available to the JCT that would enable it to measure the effect of proposals on economic growth and job creation as well as the effect on revenue levels. The Committee last reviewed this topic at a hearing in 2002, so this hearing will not only examine changes in economic thinking and the Joint Committee’s capabilities since then, but also review the extent to which the current economic climate poses new challenges to this analysis.

In connection with the hearing, the Joint Committee on Taxation has released Summary of Economic Models and Estimating Practices of the Joint Committee on Taxation (JCX-46-11) (20 pages):

This document ... provides an overview of the current procedures used in the revenue estimating process. The emphasis is on methodology and issues associated with the preparation of revenue estimates. Part I discusses the role of the budget period and budget baseline and provides an overview of the various behavioral, compliance, and indirect effects modeled as part of any revenue estimate. Part II describes, in brief, the Joint Committee staff’s primary conventional microsimulation tax models. Part III describes, in brief, the Joint Committee staff’s macroeconomic modeling of proposed changes in tax law. An appendix provides references to other work of the Joint Committee staff describing economic modeling of specific issues in more detail.

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