The Honorable Jeff Flake
United States House of Representatives
424 Cannon House Office Building
Washington, DC 20515
Dear Representative Flake:
On behalf of the more than 350,000 members of the National Taxpayers Union (NTU), I write to offer our endorsement for your bill, H.R. 2842, to establish dynamic economic modeling in the preparation of revenue estimates. NTU has long supported dynamic scoring as a means of informing taxpayers and policymakers of the full effects of a piece of legislation.
The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) use a "static scoring" method, which makes revenue estimates with the assumption that behaviors do not change with alterations in tax policy. This rigid outlook systematically generates false and misleading revenue estimates for a given policy.
Static scoring overestimates revenue lost to tax cuts because it does not account for higher growth as a result of less burdensome tax policies. The income tax rate reductions of 2001 and 2003 are clear examples of this principle, as agencies produced revenue estimates that have since been proven to be completely inaccurate. Static scoring also overestimates revenue gained from tax hikes because it does not account for legal tax avoidance activities. Perhaps the best illustration of this is the Windfall Profits Tax of 1980 - 1987, which brought in only $80 billion in revenue, compared with the original projection of $393 billion.
Your bill would improve the approach toward forecasting the effects of tax legislation by directing the CBO and JCT to use dynamic economic modeling. Such modeling attempts to reflect real-world taxpayer responses to changes in policy. As a result, estimates are more straightforward and accurate.
Members of Congress need and deserve candid revenue estimates. Though there are Members who differ greatly with you on tax and spending policy, all ought to agree that lawmakers and the taxpayers they serve should have credible numbers upon which to base their decisions. Supporting H.R. 2842 does not constitute a vote for or against a certain fiscal policy; rather, it is a vote for accuracy and honesty in the process.
We thank you for your commitment and look forward to working with you in the future to make dynamic scoring a reality. Any roll call votes on H.R. 2842 will be included and significantly weighted in our annual Rating of Congress.
Sincerely,
Andrew Moylan
Government Affairs Manager