Revenue Scoring of Tax Proposals

Background

When the government considers raising or cutting taxes, it produces official “scores” that estimate the resulting changes to federal revenues and the distribution of the tax burden. These estimates are very important in evaluating the desirability of proposed tax changes; therefore, it is vital that policymakers be provided with the most accurate and complete assessment of the likely effects of tax proposals.

 

Unfortunately, under the current scoring system, policymakers are not provided with the best information. Estimated revenue effects of proposed tax changes do not take into account most of the potential economic effects. The tax policy process, which is facilitated by the analyses conducted by the Joint Committee on Taxation (JCT) and the U.S. Treasury Department’s Office of Tax Analysis (OTA), has been slow to change and closed to public scrutiny and peer review.

 

 

The U.S. Chamber supports reforms to increase the accuracy of tax revenue and distribution estimates and the transparency of the process, and the restructuring of federal tax policy organizations to increase accountability. As part of this improvement, we suggest that JCT and OTA produce “dynamic” revenue estimates that incorporate the real-world economic effects of suggested tax changes. The Chamber also advocates improving distributional analyses (which show the effects of tax changes by income group) by incorporating longer horizons and presenting results by both consumption and income levels.