Must-Read: Greg Leiserson: The Tax Foundation’s score of the Tax Cuts and Jobs Act

Must-Read: I think Greg is right here: on their own terms the Tax Foundation’s calculations look to be twice as big as they ought to be—and, as you know, everybody else involved has very large doubts about whether one should take the Tax Foundation’s calculations as proper professional estimates:

Greg Leiserson: The Tax Foundation’s score of the Tax Cuts and Jobs Act: “First, the Tax Foundation appears to incorrectly model the interaction between federal and state corporate income taxes…

…Second, the Tax Foundation appears to treat the estate tax as a nondeductible annual property tax paid by businesses, which results in inflated estimates of the effect of repealing the tax. Appropriately addressing the issues raised in this note could reduce the Tax Foundation’s estimate of the increase in GDP that would result from the legislation to 1.9 percent—a reduction of roughly half—even if there are no other issues with the Tax Foundation’s estimates…. Critical assessment of the Tax Foundation’s analysis is particularly warranted, as some legislators have suggested that they might consider dynamic scores from organizations other than the nonpartisan Joint Committee on Taxation—the traditional source of nonpartisan estimates of congressional tax proposals—in determining the budgetary effects of the legislation.

This note does not attempt a complete assessment of the Tax Foundation model, which would be impossible without greater knowledge of the equations that make up the model. The criticisms raised in this analysis are based on inspection of publicly available estimates and documentation, as well as communication with Tax Foundation staff…

November 18, 2017

AUTHORS:

Brad DeLong
Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch